Growing grain supply is pushes prices down

Photo: Peter J.E.Roek
Photo: Peter J.E.Roek

Worldwide, the grain supply is increasing, according to all forecasts.

Last week, the grain market waited anxiously for the report on March 31 about the expected areas of maize and soy in the United States and about the state of affairs with regard to grain stocks with reference date 1 March. As a result, grain trade on the futures markets in Chicago and Paris was still characterised by caution on Tuesday, March 30. There was pressure on prices, with corn holding up somewhat better than wheat.

Downsizing of positions

In recent days, the futures markets have been heavily influenced by the reduction of positions by financial institutions. This is not an uncommon phenomenon for the end of March. Which is the end of the fiscal year for many of these organisations. If possible, they take profit and assess which positions they can take up again on the (futures) markets, for oil, for example, and certainly also for agricultural products, especially grain.

In view of the sharply increased grain prices in recent months, they have achieved a return. A few things do put pressure on the price level, which in turn spills over to the physical market. After all, in the cereal sector a lot of trade takes place on the basis of stock exchange quotations with a premium.

Growing supply of grain

Worldwide, the supply of grain is increasing. This is evident from all forecasts from, among others, the International Grains Council, the US Department of Agriculture and the European Commission. The weather can still have a major influence on the actual harvest. The large temperature fluctuations in the EU between this week and next week are therefore carefully monitored. For the situation in Western Europe, when there is much cheaper ‘foreign’ supply, the relatively high prices here have been hit hard, especially for wheat.

Kwakman
Jack Kwakman Freelance journalist
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