Analysis Grains
USDA is game changer in the wheat market
Never a dull moment in the grain market. A grain ship in the Black Sea was hit by a Russian missile and Strategie Grains lowered the yield forecast for European wheat. Add to that the buying interest from Egypt and you have enough fodder for the bulls in the market. The USDA abruptly pulled that trough away.
The December wheat contract on the Matif closed €0.25 lower at €222.75 per ton yesterday. Wheat also had to give up something on the CBoT and fell 0.1% to $5.78½ per bushel. Corn rose by 0.3% to $4.06 per bushel. Soybeans took a bigger step and increased by 1% to $10.10¾ per bushel.
Strategie Grains has lowered the yield forecast for the wheat harvest in the EU for the second consecutive month. The market agency now expects a harvest of 114.4 million tons. That is 10% less than last season and the smallest European grain harvest since 2012. The wet growing season in Germany and France is the main reason behind the reduction.
In the Black Sea, the bulk carrier Aya was hit by a Russian missile. According to sources, the ship was near Romanian territorial waters, not far from Constanta. The bulk carrier was loaded with grain in Chornomorsk and was on its way to Egypt with a cargo of wheat. There were no injuries in the attack, and the ship was able to continue sailing under its own power.
The Russian missile attack on the Aya comes at a poignant moment. The Egyptian state buyer Gasc and Russia were said to have struck a private deal for the delivery of wheat. Gasc has purchased 430,000 tons of Russian wheat for $235 per ton.
Game Changer
The U.S. Department, with the September edition of the Wasde report, changed the mood. No changes for the wheat harvest in America, those will come next month. For Europe, the USDA has reduced the harvest by 4 million tons to 124 million tons. For Australia and Ukraine, there was an increase. Overall, world wheat production has been reduced by 1.4 million tons to 796.9 million tons. Wheat consumption was increased by 900,000 tons to 804.9 million tons. The expected ending stocks were also increased by 600,000 tons to 257.2 million tons. This increase is mainly due to a revision in the beginning stocks of Canada and Brazil.
For corn, unlike the CBoT suggests, the Wasde report was slightly bearish. Corn in the U.S. is relatively doing well, and the USDA expects good yields. If the expectation holds true, America is set to have the second-largest corn harvest ever. According to analysts, the Wasde report is somewhat bullish for soybeans. The soybean harvest forecast in the U.S. was slightly reduced from 4.489 million bushels to 4.586 million bushels. Not a spectacular change, but combined with drought in Brazil, analysts see a good demand for North American soybeans in the coming autumn and winter.
