The 'meltdown' on the global financial markets has had a limited impact on grain prices. Although the prices of wheat and corn closed a few euros lower, this is not in proportion to the reductions shown on other stock exchanges. Rapeseed took the biggest hit.
The September contract for wheat on the Matif closed on Monday evening, August 5, at €215,75 per tonne. That is €4 lower than Friday's close and the lowest price in almost a week. On the CBoT in Chicago, wheat ended at $5,34. A decrease of 50 cents compared to Friday's rate. Corn closed 45 cents lower at $3,86 a bushel and soybeans lost $1,5 to $10 a bushel.
Oilseed rape loser
The October Matif oilseed rape contract lost €18,50 per tonne on Monday to end at €453,75 per tonne. That is the lowest price in a week. This product is more sensitive to macroeconomic fluctuations because price formation is linked to the oil market. The Canadian futures market was also closed due to a national holiday, leaving the Matif on his own.
On Tuesday, August 6, Matif initially opened slightly lower for wheat, before rebounding during the morning to a price level above €216 per tonne. Oilseed rape has to lose a few euros again.
Worries about recession
In addition to the downgrade on the financial markets, the strong exchange rate of the euro and pressure from Russia also play a role in the European market. There are major concerns about a recession in the United States and that also worries the grain market. A similar sentiment is palpable in Europe.
It is becoming increasingly clear that the wheat harvest, especially in France and Germany, is a major setback. In France, where more than half of all wheat has been harvested, traders now expect 25 to 26 million tons of wheat. Before the harvest, this was still 30 million tons. That is the smallest harvest since the 80s and even lower than the disastrously bad 2016. In Germany, the harvest in the south has largely been completed, with disappointing yields and quality. In the north and east the crops are in better shape and hopefully the figures are also better.
Quality below average
Persistent showers in Germany and France further reduce the quality of the wheat. This situation is becoming increasingly worrying. French commodity trader Soufflet Agriculture sees average hectoliter weights of 74-75 kg/hl. This is below the French industry standard of 76 kg/hl. Measured protein levels are between 11% and 11,5%.
At the beginning of the harvest it was assumed that 65% of French wheat would be suitable for milling wheat. It is now clear that this is not the case. Even at this percentage, the country amounts to 16,9 million tons. This is below the all-time low of 16,1 million tons from 2016. FranceAgriMer estimates EU wheat exports at 7,5 million tons, compared to 10,2 million tons last season. French traders are now buying batches of milling and baking wheat in Latvia and Lithuania to fulfill their orders. In addition to the quality issue, French arable farmers are very reluctant to sell wheat.