In the current harvest time, the physical wheat market is affected by the first supply, which is larger worldwide than last season. EU results, however, are disappointing, especially in France and in the United Kingdom. This supports the price.
In the current harvest time, the physical wheat market is affected by the first supply, which is larger worldwide than last season. Photo: Peter Roek
Paris wheat futures maintained a level of around € 183.00 last week. This week started off with a trend of slight price pressure. Corn shot up late last week for the August contract. The short-term corn supply is on the tight side. The November contract stayed around € 163.00 to € 164.00. This will not be as promising this week, as it will come under some pressure.
The Chicago wheat price fluctuated within narrow margins, with some price pressure; American exports have not been running smoothly. There was little movement in Chicago corn prices at the beginning of the week.
The physical market and the futures market diverge
Wheat prices do not change much in the physical market, despite a considerably lower production in France compared to last year, reports Agritel. The physical market and the futures market are likely to diverge price-wise in the near future. Growers tend to hold onto their grain pending the market results. After all, the harvest is relatively small. In addition, the quality is a lot lower compared to last harvest year.
Overview of futures prices for: corn, wheat and soybean
Disappointing wheat harvest in the United Kingdom
Agricultural-economic website, Agrimoney, indicates that the wheat harvest in the United Kingdom will not get great results either in this season. With hectare yields between 6.4 and 6.8 tonnes, the UK are well below last year’s result of 7.8 tonnes per hectare. Agrimoney reports a wide variation in the results, even at the level of the individual plots. Particularly on lighter soils, the crop has suffered greatly from excess rainfall in the autumn of 2019 and the drought last spring.
Large corn harvest in the US and Ukraine
In the corn market, we see progress towards a large harvest in both the United States and in Ukraine, while French corn production will suffer from water shortages. In the US, the favourable weather conditions for corn even compensates for the declining acreage. The hectare yields are very promising. Although the United States have recently been able to supply a lot of corn to China, it has not proven to be a price-driving factor.