Players in the American grain market are somewhat more optimistic than their European counterparts. The near-end of the US government shutdown, which lasted over a month, plays a role in this. Price-wise, Europe has a slightly stronger advantage on the global market. However, a substantial wheat order from Egypt did not lead to a revival in European wheat trading.
The December wheat contract on the Matif closed yesterday down €0,75 at €190,75 per tonne. On the CBoT, grains closed in the green last trading session. Wheat rose 8 cents to $5.35¾ per bushel. Corn closed 2½ cents higher at $4.29¾ per bushel. The biggest gainer on the Chicago exchange was soybeans, up 14¼ cents to $11.16 per bushel.
The apparent imminent end to the US government shutdown is one of the factors that has boosted sentiment on the Chicago stock exchange. Seven Democrats and an independent congresswoman in the US Congress have shifted toward the Republicans, securing a majority for the budget proposal and ending the longest shutdown ever. There's a catch, however, because the current proposal only covers government spending until January 30th. It will also take some time for the House of Representatives and the president to approve it and for the federal government to be fully operational again. Nevertheless, the USDA will release a Wasde report this Friday evening (Dutch time), the first since September. Traders and analysts also hope to receive figures on US exports soon. This will validate reports about Chinese purchases of soybeans and wheat in the US.
The rising trend in grain prices on the Chicago stock exchange hasn't really been replicated in Europe yet. This is despite the fact that European wheat, as well as wheat from the Black Sea region, is relatively competitively priced on the global market. A positive development in this regard is an order from Egypt. According to various sources, Egypt has purchased 500.000 tons of wheat for delivery in December and January. Of the order, 200.000 tons come from Russia, and Bulgaria, Romania, and Ukraine are each supplying 100.000 tons.
The Ikar price for Russian wheat rose by $1,50 to $232 per tonne. Ikar expects Russia to export between 5,2 and 5,4 million tonnes of wheat in November. This is slightly above SovEcon's forecast, which anticipates exports of 4,7 million tonnes for November.
In Brazil, farmers are well over halfway through sowing their planned soybean acreage. According to AgRural, 61% of the soybean is in the ground, compared to 47% last week. In the largest soybean province, Mato Grosso, 86% has been sown, which is slightly behind the historical average, AgRural reports. According to the agency, sowing has been done early enough to allow the soybean harvest to begin in the second half of January.
The news for the US soybean sector is less favorable. Brazilian soybeans are already cheaper after the rally on the CBoT, and if the harvest there can indeed begin early, the price difference will likely widen rather than narrow. The fact that China has not yet officially confirmed that it will purchase 12 million tons of soybeans next year and 25 million tons over the next three years is causing concern for some analysts.