Analysis Grains & Commodities
Tax plan lights a fire under corn and soy
The action last trading session was in corn and soy. Brazil's tax plans could make corn and soy from this country more expensive. American exporters and traders are betting that they can regain market share from Brazil. Russia's export capacity is being doubted on the wheat market. The customer base could become smaller next season due to more limited availability.
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Choose the subscription that suits youThe September contract for wheat on the Matif closed €3 lower yesterday at €251,25 per tonne. Wheat also took a step back on the CBoT, closing 1,1% lower at $6.39½ per bushel. Corn and soy were on the rise last trading session. Corn was the biggest gainer at 3,9% to $4.52 per bushel. Soy also recorded a big plus of 1,9% to $12.00 per bushel.
Drought in the Black Sea region was one of the reasons for the rally in the wheat market in recent weeks. Several agencies adjusted the revenue forecast downwards. The Ukrainian Ministry of Agriculture does not participate in this and maintains an expected yield of 52,4 million tons. That is the same as the previous prediction.
There are less favorable sounds from Russia than that everything will be fine with the wheat harvest. According to the Russian VTB bank, Russia could limit exports to traditional markets. "Exports will probably not be as wide as in the current season," Vitaly Sergeychek, director of the bank, told a conference in St. Petersburg. VTB is one of the largest financiers of the agricultural sector in Russia.
New stricter tax laws in Brazil swung corn and soy last trading session. Brazilian companies fear that this will make them less competitive on the global market. Traders and exporters in the US see value in the stricter tax rules in Brazil and expect to be able to regain market share lost to Brazil.
Wet in Iowa just like us
In the American state of Iowa, it was wet last May, just like ours. Last month is in the top 10 of wettest May months since measurements began. Precipitation amounts vary greatly per region, from roughly 150 to 250 millimeters. According to local sources, there is water on some plots - causing damage - and it will take some time before it dries sufficiently to sow the last corn and soy. Despite the fact that it was very wet in May, spring work was still carried out at a rapid pace in Iowa. According to the latest Crop Progress report this week, 93% of maize had been sown compared to 95% in the five-year average.
This is mainly due to the very dry start to the season. More than a month ago, much of Iowa was still colored red on the drought monitor. After last month's rain, only a yellow spot remains. The soil had room to absorb the necessary moisture. There is hardly any drought in the Corn Belt anymore. Only in the southwest of the wheat belt are growers dealing with real drought.
