Analysis Grains & Commodities
Growing weather puts pressure on corn and soybean prices
Most of the action was in soy and corn last trading session. Favorable growing conditions in South America and disappointing demand from China put pressure on prices on the futures market. Wheat was up on the Paris stock exchange. Despite the smallest export in over twenty years, the French final stock of wheat is smaller than last season according to FranceAgriMer.
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Choose the subscription that suits youThe March wheat contract on the Matif closed yesterday €0,50 higher at €232,75 per tonne. On the CBoT, grains closed in the red. Wheat closed 0,7% lower at $5.41¼ per bushel. Corn fell more than wheat, losing 1,4% to close at $4.37¼ per bushel. The biggest price drop was in soybeans during the last trading session. The January soybean contract closed 2,6% lower at $9.51¾ per bushel.
Favourable weather forecasts for soy and corn growers in South America are putting pressure on prices for these products on the futures market. According to analysts, the market is looking for a bottom, especially for soy. This is largely attributed to the good harvest expectations for soy in Brazil. Soy can be sown in the country from 1 September and the harvest of the first sown soy usually starts in January. With a relatively large harvest approaching, traders are already anticipating a depressing supply of soy from Brazil.
The USDA expects that for the third year in a row, the global soybean harvest will exceed consumption, raising ending stocks to 131,87 million tons, the highest level ever. The stock/consumption ratio (stocks/use) comes out at 32,7% in the USDA forecast. Only in the 2018/19 season was that percentage higher. There is an interesting parallel to be drawn there. In that season, the trade war between the US and China reached its peak in the first term of US President Trump.
Disappointing demand for corn
For corn, China's customs figures were downright bearish. According to its own figures, China imported 300.000 tons of corn in November. That is 92% less than in the same month a year earlier. Since January 1, China has imported 13,3 million tons of corn. Compared to the first eleven months a year earlier, China has imported 40% less corn. The moderate mood in corn was further reinforced by the news that the Chinese state buyer Sinograin will not be marketing imported corn for the time being. This is part of the policy to push up the corn price on the domestic market. On the Chinese market, the corn price is at its lowest level in 4,5 years. Chinese farmers are having a hard time due to a good harvest and weak demand for corn.
Algeria buys wheat from Canada
Wheat was hit by developments in corn and soy on the Chicago stock exchange. However, the decline was not as bad as some analysts say. Setbacks in Russia and Ukraine regarding the state of the crop for the coming harvest are more or less offset by windfalls in Australia and Argentina, where the harvest is now underway. According to sources, Algeria has secured an unknown quantity of durum wheat for delivery in March/April. Prices are said to range from $340 to $352 per tonne C&F (free of charge). According to the sources, the largest part is said to come from Canada, but the US and Australia are also said to have secured part of the order.
In France, exports are not going so well. FranceAgriMer expects 3,9 million tonnes of wheat to be shipped to destinations outside the EU this season. This is 66% less than last season and the lowest export since the 2000/01 season. Within the EU, FranceAgriMer expects to export 6,2 million tonnes of wheat. This is 2% less than last season's exports within the EU. The final stock of wheat in France is set at 2,9 million tonnes of wheat, 10% less than last season.