The 'meltdown' on the financial markets worldwide has had a limited impact on grain prices. Although the prices of wheat and corn closed a few euros lower, this is not proportional to the reductions seen in other markets. Rapeseed took the biggest hit.
The September contract for wheat on the Matif closed on Monday evening, August 5th, at €215.75 per ton. That is €4 lower than Friday's closing price and the lowest price in almost a week. On the CBoT in Chicago, wheat ended at $5.34, a decrease of 50 cents from Friday's price. Corn closed 45 cents lower at $3.86 per bushel, and soybeans lost $1.5 to $10 per bushel.
Rapeseed loser
The October contract for rapeseed on the Matif lost €18.50 per ton on Monday, ending at €453.75 per ton. This is the lowest price in a week. This product is more sensitive to macroeconomic fluctuations because its pricing is linked to the oil market. Also, the Canadian futures market was closed due to a national holiday, leaving the Matif on its own.
On Tuesday, August 6th, Matif initially opened slightly lower for wheat but bounced back to a price level above €216 per ton by late morning. Rapeseed had to give up a few more euros.
Concerns about recession
In addition to the downgrading in the financial markets, the strong euro exchange rate and pressure from Russia are also affecting the European market. There are significant concerns about a recession in the United States, which is also worrying the grain market. A similar sentiment is felt in Europe.
It is becoming increasingly clear that the wheat harvest, especially in France and Germany, is a major disappointment. In France, where over half of all wheat has been harvested, traders are now expecting 25 to 26 million tons of wheat. Prior to the harvest, the estimate was 30 million tons. This is the smallest harvest since the 1980s and even lower than the disastrous 2016. In Germany, the harvest in the south is largely complete with disappointing yields and quality. In the north and east, the crops are in better condition, hopefully yielding better results.
Below-average quality
Persistent showers in Germany and France are causing the quality of wheat to deteriorate further, a situation that is becoming increasingly concerning. The French raw material trader Soufflet Agriculture is seeing average hectoliter weights of 74-75 kg/hl, below the French industry standard of 76 kg/hl. Protein levels range between 11% and 11.5%.
At the start of the harvest, it was expected that 65% of French wheat would be suitable for milling. It is now clear that this is not the case. Even at this percentage, the country would reach 16.9 million tons, below the absolute low of 16.1 million tons in 2016. FranceAgriMer estimates EU wheat exports at 7.5 million tons, compared to 10.2 million tons last season. French traders are meanwhile buying batches of milling and baking wheat from Latvia and Lithuania to fulfill their orders. In addition to quality issues, French farmers are very hesitant to sell wheat.
© DCA Market Intelligence. Op deze marktinformatie berust auteursrecht. Het is niet toegestaan de inhoud te vermenigvuldigen, distribueren, verspreiden of tegen vergoeding beschikbaar te stellen aan derden, in welke vorm dan ook, zonder de uitdrukkelijke, schriftelijke, toestemming van DCA Market Intelligence.
