The futures markets for grains showed a strong recovery last week. Wheat and grain maize in particular performed better. The markets are on the rollercoaster called the weather. Extremes in both drought and wetness cause the score to be higher.
On Tuesday, July 27, the Matif was even lower for wheat, but later in the week it rose sharply, closing at €223,25 per tonne on Friday. The September contract continued on Monday and was quoted at €227,50 in the afternoon. The CBoT in Chicago initially also put higher prices on the board for September, but on Friday and today (Monday, August 2) the price fell again.
Corn price through the roof
The price of grain corn in Paris also rose sharply to €284 on Friday. On Monday afternoon it is even trading at €300. This has to do with the expiration of the August contract. The November contract (new harvest) now stands at €213,25. In the US, the American corn quotation is actually lower.
Weather extremes are the main motivator for the grain market at the moment. In North America that is drought. It is becoming increasingly clear that the spring wheat harvest is significantly lower in the northern part of the US. It could be the smallest harvest in almost 30 years. Drought and heat this season ensure that. The areas where corn is grown also experience dry weather. Sufficient precipitation has not fallen everywhere. This news is not yet immediately noticeable in the market.
Russian harvest reduced
While wetness mainly plays a role in Europe, drought is also discussed in Russia. This ensures that the wheat harvest can go smoothly, but it is less positive for summer grains, corn and sunflowers. It was also announced that the variable export tax will remain in force, including next season. Market agency IKAR estimates the current wheat harvest at 78,5 million tons, compared to 81,5 million tons previously. The USDA remains committed to 85 million tons but will release a new estimate later this month.
As a result of this reporting, prices of Russian wheat are rising. It is now paid $254 per tonne FOB. That's an increase of $6 from the week before. Disappointing yields are reported in Central Russia and the Volga region. This is the main reason to reduce wheat totals. Of the total wheat area, 15,6 million hectares have now been harvested.
Changing weather
In Europe, the combines in many places stood still last week or could hardly work. Hopefully that will change this week. The figures for yield and quality vary. In many places they are not easy. The weather will remain changeable and changeable in the coming period, which means that there will be no stable harvest period. This also fuels the grain market with price increases on the one hand due to drying and on the other hand declining quality and a difficult harvest.
Wheat buyers are taking it easy. Countries in the Mediterranean region tender for wheat but physically buy little. Today it was announced that Egypt has purchased only 1 shipment in Romania. In addition to the price level of wheat, the enormous price increase in transport is a hindrance for buyers.