New report calms wheat market

17-09-2021 | |
Photo: Canva
Photo: Canva

A slightly higher forecast for wheat production will reduce tension in the global wheat market.

The results of the new Wasde report from the US Department of Agriculture resulted in slightly lower wheat prices in the futures market on Friday. And on Monday morning, trading in the Paris futures market also responded with slightly lower pricing.

New wheat harvest forecast above previous prediction

The yield forecast for wheat has been slightly lowered in Canada and Argentina, but bigger harvests are now expected in Australia, India and China. As a result, the new harvest forecast is based on a worldwide wheat production of 780 million tons. That is more than 3 million tons more than was predicted a month ago.

Chicago wheat prices fell

In the run-up to the new Wasde report, wheat prices fell every day last week. Partly because of this, the outcome of the report was already largely passed on in the price development. And on Friday there was still a decline that was ultimately the smallest of the entire week. For the whole week, wheat prices in Chicago fell 5.5% to $6.75 per bushel (about €210 per ton).

Futures market in Paris calmer than Chicago

In Paris, Monday started with a slight drop in wheat prices. However, trade recovered around €238 per tonne based on December delivery. This means that the price level fluctuates more than 2.5% below the level of Friday 3 September. Mid-August, this contract briefly traded just above €250 per tonne and now trading appears to be stabilising at just below €240 per tonne.

In that respect, the futures market in Paris shows a calmer picture than in Chicago. In mid-August, business was done there in the December supply contract at a level of converted € 240 per tonne, and prices there have therefore fallen to around € 210 to € 215 per tonne.

Yield forecast maize

For maize, yield forecasts in the United States and China have increased compared to August. Yield expectations have also been raised in Argentina. All in all, this results in a plus of just under 12 million tons to a worldwide production of less than 1,200 million tons.

Trading apparently expected more as prices recovered on Friday. The price climbed again towards $ 5.2 per bushel or about € 175 per ton. In August, the December contract was slightly above € 190 per tonne. There were much larger price differences at the end of the season this year in the July and September contract trade. In Paris, the maize contract for delivery from November fluctuates at a price level of € 210 to € 215 per tonne.