Wheat and corn prices under pressure

19-03-2021 | |
Wheat and corn prices
Photo: Wenderson Araujo

Wheat exports from France and the US are slowing down. When it comes to corn, the coming weeks will show just how much China’s appetite for purchasing eases as a result of the resurgence of African swine fever.

The future markets in both Paris and Chicago last week saw the price of wheat fall a few percent.

Exports under pressure

Exports are more difficult for both Western Europe (France) and the United States, partly due to the influence of the exchange rate. Romania is currently more competitive than France, Russia and Ukraine and has secured a supply of 360,000 tonnes to Egypt. That is surprising, according to market agency Agritel, since Romania had a considerably smaller harvest in 2020, namely 6.2 million tons compared to 10 million tons on average over the previous 3 years. The price influence mainly applies to the US. The dollar is currently strong, but that is unfavourable for exports.

Argentina: Drought impacts corn quality

The state of the corn in Argentina is very poor. Only 17% is rated as good to excellent. Last year that rating was more than double. It is due to the persistent drought, which, incidentally, is also counteracting the growth of soy.

Brazil: Excessive rain delay corn planting

In Brazil, excessive rain remains an important factor in the prospects for corn production. This is because corn planting is planned for after the current soy harvest, which will start late.

ASF recurrence in China

All in all, the pressure on corn prices on the futures market is largely due to concerns about the recurrence of African swine fever in China. This reduces the need for extra feed grains for the pig herd that is under reconstruction.

Winter crops

Winter wheat is doing well in France. 88% is good to excellent, compared to 64% around this time last year. The same goes for winter barley. The Netherlands Enterprise Agency reports that the winter conditions in Russia and Ukraine have caused less damage to the wheat than initially expected. According to the agricultural-economic site Agrimoney, another cold period is expected for Russia. The situation therefore remains uncertain.

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Jack Kwakman Freelance journalist