The air above the grain market is not clearing yet

The September wheat contract on the Matif closed €2,50 higher at €223,75 per tonne. On the CBoT, wheat was up slightly, closing 2% higher at $5.54¼ per bushel. Corn also inched higher, closing 0,9% higher at $4.06¾ per bushel. Soybean moved more sideways, trading 0,1% higher at $11.42¾ per bushel at the end of the trading day.

The grain market closed yesterday in the green across the board, but it is not very convincing. The unrest in the Black Sea region is, at least to a large extent, ignoring the market for the time being. Yesterday it was announced that Ukraine had detained a grain ship that, according to the Ukrainian secret service, was loaded with stolen grain from the Russian-occupied territories. It remains to be seen how Moscow will respond to this. The Kremlin gave a signal that Russia will not simply let things go by stating that it sees movement at NATO. According to the Kremlin, alliance equipment would be moved towards the Russian border.

Flooding
The weather reports also do not have the effect on the grain market that you would expect. In our region it is a regular routine of rain and few workable days. In the US, local flooding is being reported in the Midwest. While water was welcome in parts of Iowa and Illinois, too much has fallen for good measure. The Mississippi (including tributaries) is high, which makes the drainage of water difficult, according to some experts.

Drier but especially warmer weather is on the rise in the US. Heat could cause stress, but for a change water is not a problem after years of mainly drought. Much of the Midwest is also not included in the drought monitor this week.

The corn and soybean growing season in the US is going fairly smoothly. It remains to be seen whether the arable farmer will gain anything from it. Prices for these major crops in American arable farming have fallen much faster than cultivation costs. The University of Illinois calculated that on the highly productive farms in Central Illinois, a negative margin remains for the grower after deducting all costs including land rent. By 2024, the university expects a balance after deducting direct costs and overhead but excluding land costs of $250 per acre of corn. After deducting land rent (cash interest) at $359, the grower has a negative margin of just under $110 per acre. By comparison, in 2022 the balance for an acre of corn was $690 before land rent deductions and $332. In the preliminary figures for 2023, there is a negative margin after deducting all costs including land rent of $164 per acre. After two years, little remains of the great results in 2022.

The summer schedule will start next week and the grain analysis will be published once a week. If there are any relevant current developments, we will keep you informed in the meantime.