The wheat market is looking for a new balance. In Paris the rise continued yesterday, but in Chicago the momentum of the rally is weakening. Bearish news for wheat came from Canada. In Brazil, soy exports are suffering due to the devastating floods in the south of the country.
The September wheat contract closed yesterday by €2,25 higher at €259,25 per tonne. On the CBoT, wheat showed a small correction to close 0,6% lower at $6.93 per bushel. Corn and soy closed in the green at the Chicago stock exchange. Corn closed 0,7% higher at $4.61¼ a bushel. Soy was 0,8% higher at $12.46¼ per bushel.
The momentum of the wheat market rally is weakening somewhat. According to analysts, the frost and drought damage to wheat in the Black Sea region has been largely incorporated into the price. The Russian central bank warned yesterday that the risk of rising inflation is increasing due to rising grain prices.
Balance
Particularly in Chicago, a new balance is being sought in the wheat market. After the sharp increase earlier this week, speculators are exiting and interest among physical sellers is increasing to hedge at this level. Analysts are therefore not nervous about yesterday's decline. Tunisia yesterday committed 100.000 tonnes of wheat in a tender for $273,69 per tonne C&F. Where the wheat comes from has not been disclosed.
LSEG yesterday released a new yield forecast for wheat in Canada. The agency estimates wheat yields for the coming harvest at 34,3 million tons. That is 7,5% more than last season's harvest. The higher wheat yield is partly due to an expansion of the area and partly due to higher yields.
Chains disrupted
AgroConsult estimates the harvest of the successive crop maize - the Safrinha crop - for Brazil at 96,7 million tons. That is 10% lower than last season. The weather is not helping corn growers, especially in the states of Parana and Mato Grosso do Sul. Further south, in Rio Grande do Sul, 2,5 to 3 million tons of soy have been lost due to the devastating floods, according to Cogo. Soy exports are also delayed due to the floods. The peak of the Brazilian soy export season is from March to June. Due to the logistical problems, Brazilian exporters are putting a premium on soy. Several large customers are therefore switching to cheaper suppliers. Expected soy exports in May for Brazil have been reduced from 14,13 million tons to 13,83 million tons.