Supply of grain from the Black Sea region depressed wheat prices last trading session. Ukrainian grain exporters have got the hang of it and exported 2,4 million tons more in the still short new season than last season. Further east, in China, prices for agricultural products are on the rise. Due to extreme weather, harvests are disappointing and Chinese consumers are feeling this in their wallets.
The September contract for wheat on the Matif closed €4,50 lower yesterday at €199,25 per tonne. At the CBoT, wheat lost 2,5% to $5.19¾ per bushel. Corn closed ½ cent higher at $3.75½ a bushel. Soy was on a stronger rise, rising 0,6% to $9.63 per bushel.
The supply of relatively cheap wheat from the Black Sea region weighed heavily on the European market. Ukraine has exported 21 million tons of grain this season until August 6, the Ukrainian ministry announced yesterday. Last season this was 3,6 million tons during this period. Almost half of this, namely 2,8 million tons, concerns wheat. Furthermore, Ukraine exported 2,2 million corn and 1 million tons of barley.
The total harvest of grains and oilseeds is estimated at 77 million tons by the Ukrainian Ministry of Agriculture. The estimate for wheat is 21,8 million tons. That's in line with the USDA's forecast earlier this month.
Reached bottom?
In the US, the Pro Farmer Crop Tour has now visited the important corn states of Illinois and Iowa. Traces of the wet spring can be seen in northwest Iowa. In Illinois the corn is growing consistently and well. According to some experts, the fact that the good expectations for the coming harvest do not push the price much further could be a sign that corn has reached the temporary bottom.
Crop failures in China
In Europe and America the grain market continues to struggle. That is different in China. Due to extreme weather from devastating floods to sweltering heat, prices for agricultural products are on the rise, Reuters writes based on data from the Chinese Ministry of Agriculture. The wholesale price of 28 crops for which the ministry maintains an index increased by 40% in the period from June 17 to August 15. Compared to last year, vegetable prices have increased by up to 25%. Rising food prices this summer are an additional headache for the Chinese government. The country is already struggling with lagging industrial growth, high unemployment and uncertain demand for Chinese products abroad.
In Henan province - a major agricultural region - 1,13 million hectares of arable land have been affected by extreme weather. The Chinese government has been forced to release $14 billion for the recovery of areas that have suffered from flooding.