Analysis Grains
Poor Harvests a new concern in China
Offers of grain from the Black Sea region pushed down wheat prices during the last trading session. Ukrainian grain exporters are doing well and exported 2.4 million tons more in the still young new season than last season. Further east, in China, prices for agricultural products are on the rise. Due to extreme weather, harvests are disappointing, impacting the Chinese consumer's wallet.
The September wheat contract on the Matif closed €4.50 lower at €199.25 per ton yesterday. Wheat on the CBoT lost 2.5% and settled at $5.19¾ per bushel. Corn closed ½ cent higher at $3.75½ per bushel. Soybeans showed stronger performance, rising by 0.6% to $9.63 per bushel.
The supply of relatively cheap wheat from the Black Sea region weighed heavily on the European market. Ukraine has exported 6 million tons of grain by August 21 this season, as announced by the Ukrainian ministry yesterday. Last season, during this period, it was 3.6 million tons. Nearly half of this, namely 2.8 million tons, is wheat. Furthermore, Ukraine exported 2.2 million tons of corn and 1 million tons of barley.
The total harvest of grains and oilseeds is estimated at 77 million tons by the Ukrainian Ministry of Agriculture. The forecast for wheat is 21.8 million tons, in line with the USDA's prediction earlier this month.
Bottom reached?
In the US, the Pro Farmer Crop Tour has already covered the important corn states of Illinois and Iowa. In northwest Iowa, traces of the wet spring are visible. In Illinois, the corn looks consistent and good. Some experts suggest that the good expectations for the upcoming harvest not pushing the price much lower could be a sign that corn has reached a temporary bottom.
Poor harvests in China
In Europe and America, the grain market continues to struggle. However, the situation is different in China. Due to extreme weather ranging from devastating floods to scorching heat, prices for agricultural products are rising, as reported by Reuters based on data from the Chinese Ministry of Agriculture. Out of 28 crops tracked by the ministry, wholesale prices increased by 40% from June 17 to August 15. Compared to last year, vegetable prices have risen by up to 25%. Rising food prices this summer are an additional headache for the Chinese government, which is already dealing with sluggish industrial growth, high unemployment, and uncertain demand for Chinese products abroad.
In Henan province - a significant agricultural region - 1.13 million hectares of farmland have been affected by extreme weather. The Chinese government has allocated approximately $14 billion for the recovery of areas hit by floods.
