It is not easy to be a grain merchant in the current corona crisis.
Nobody knows how the global economy will be in a few months. Will there be a second wave of infections? And if so, to what extent? How long will it take to get a safe vaccine against Covid-19? How long will the economic recession last? How deep is the hole that the economies will fall into?
At the end of last week, corn became more expensive in the Chicago futures market due to drought in the Midwest in the United States, where much corn is grown. It is expected to rain there this week, and the corn price fell again yesterday. Corn became more expensive on the futures market in Paris, for no apparent reason.
The wheat price rose Tuesday July 7 in Chicago, as well as on the futures market in Paris. The harvest has started in Russia and the EU and the hectare yields are somewhat disappointing. The French Ministry of Agriculture estimates the wheat harvest at just over 31 million tons. That is more than 6 million tons less than last year and the second lowest harvest in the last 16 years.
Overview of futures prices for: corn, wheat and soybean
The price increase for wheat is remarkable because the world is harvesting much more wheat this season than is necessary for consumption. The world food organization FAO expects the harvest to be 7.4 million tons higher than consumption. The United States Department of Agriculture (USDA) estimates the surplus at 9 million tons and the International Grains Council even more than 12 million tons. That is a significant surplus on consumption of around 752 million tons. It indicates that the grain market is now mainly looking at the short term. The long term is too difficult to estimate.
This week the forecast is: The grain market remains uncertain
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