Speculators showed a bit more interest in the grain market during the last trading session. Drought in combination with relatively low prices supported the prices. It is certainly not certain that the downward trend on the grain market has been broken.
The September wheat contract on the Matif closed yesterday €4,25 higher at €193,75 per tonne. On the CBoT, prices also closed in the green yesterday. Wheat closed 2,1% higher at $5.08¼ per bushel. Corn gained 1,5% to $3.67¼ per bushel. Soybeans saw a more modest increase of 0,8% to $9.67½ per bushel.
The weather forecast, combined with a dip in futures markets, is tempting speculators back into grains this past trading session, analysts say. The USDA lowered the rating of spring wheat in the US by 4% to 69% of the area rated good or excellent in its Crop Progress report earlier this week. As a result, the yield of spring wheat in the US could be lower than the USDA expects.
Jordan has tendered 60.000 tonnes of wheat for $254,50 per tonne C&F (freight forward), delivery in October. The tender was open for 120.000 tonnes. Earlier this month a tender was cancelled according to sources due to high prices and now Jordan has secured half of the target volume. The EU is still struggling with grain exports. The counter this season now stands at 3,93 million tonnes. That is 20% less than the same period last season.
Drought
While drought is not the biggest problem for farmers in our regions, it is different in other parts of the world. It is dry in the Black Sea region and according to the weather models, this will not change in the coming week/ten days. In Brazil, too, the coming decade will remain drier than average according to the weather reports. This is favourable for the harvest of the second crop of maize, but almost 95% of this has been harvested according to Patria Agronegocios. A shower would be welcome before the start of the first crop of maize. 4,2% of the planned area of first crop maize has been sown according to AgRural. Last year at this time, 7,5% had been sown according to the agency. Due to moderate prices, AgRural expects the area of maize to be 3,5% smaller in Brazil.
Insect plague
In Argentina, farmers are also less inclined to sow corn next season. According to some local sources, the area of corn could shrink by 2 million hectares next season. That would be the largest year-on-year area shift in almost 20 years. Last season, leafhoppers caused a lot of damage to corn. Argentine farmers therefore prefer to sow soy next season.
In the American corn belt, it is becoming dry. This was also reflected in the Crop Progress report. Early September, it was supposed to get a bit cooler in the corn belt, but significant rain is not in the forecast. Nevertheless, according to the Crop Progress report, corn has not been doing so well since 2018. The announcement by the USDA that 128.000 tons of corn had been sold to Mexico, together with drier conditions, caused a small revival in corn on the Chicago stock exchange.