2023-09-20 18:30:05
New York (awp/afp) – After long periods of decline, wheat and corn prices seem to have found a bottom, but the abundant supply is preventing these markets from rebounding frankly, while the harvest is in full swing in Europe and in the USA.
“This September is the best opportunity for wheat to stabilize, especially with the USDA report last week,” commented Michael Zuzolo of Global Commodity Analytics and Consulting.
After having already reduced its forecasts in August, the United States Department of Agriculture (USDA) has once more lowered, by 6 million tonnes, its estimate of world wheat production for the current campaign, mainly due to harvests lower than the expectations in Australia, Canada and Argentina, hit by drought.
Since the spring, wheat has lived to the rhythm of Russian exports, which are flooding the market, at knockdown prices, and eating into the market shares of other major producers, first and foremost the United States, whose exports are down by almost 30% compared to 2022.
But in recent days, “there is not only negative news for prices coming from Russia,” explains Michael Zuzolo.
According to the analyst, signals suggest that Russian producers are seeking to obtain higher prices, even if it means selling fewer goods in the short term.
“It seems more and more obvious that the Russians have put in place a floor price of 270 dollars per tonne +FOB+ (excluding transport costs, taxes and insurance), while they were until recently around 230 dollars,” says Damien Vercambre, from Inter-Courtage.
“We are seeing a hardening on the Russian side, which plays into the hands of other origins,” continues the analyst. “We have the impression that they are trying to play in wheat what they do in oil, trying to maintain a certain price level to amass gains.”
According to Michael Zuzolo, certain Russian regions have also been penalized by a shortage of fuel, which disrupted harvests and the transport of the king cereal.
Furthermore, the SovEcon firm on Wednesday lowered its projection for the Russian wheat harvest, to 92.1 million tonnes compared to 91.6 so far, due to the drought in Siberia.
Record harvests
The announcement of the departure of a bulk carrier carrying 3,000 tonnes of wheat from the Ukrainian port of Chornomorsk at the start of the week, despite repeated threats from Moscow, did not affect prices, because the loading was symbolic in terms of Ukrainian exports. .
“We see that there wasn’t too much trouble loading this boat but it’s a very small drop in the ocean,” insists Gautier Le Molgat, from the Agritel firm. “We would really have to go back on boats in deep waters (via the Black Sea rather than the Danube) to be in a phase of dynamic export.”
Overall, despite the more mixed picture in Russia, “there is no real reason for a rebound” in wheat, “even if I don’t see prices falling once more,” said Rich Nelson of Allendale.
The situation is even bleaker for corn, harvests of which are underway in Europe and North America, a period traditionally conducive to a drop in prices.
In mid-September, grass hit a low in the United States that it had not seen for nearly thirty months, while in Europe, it fell to its lowest since March 2022, i.e. in the first days of the invasion of Ukraine.
The “need to find competitiveness in relation to wheat and availability weighs on this product”, places Gautier Le Molgat.
According to Arlan Suderman of StoneX, the American corn harvest should show “disappointing yields”, due to a lack of precipitation, but of insufficient magnitude to make operators react significantly.
The USDA still expects record global corn production, at 1,214 million tonnes, as well as colossal end-of-period stocks, permanently weighing down prices.
Relatively preserved until now from the torments of wheat and corn, soya is in turn undergoing a correction.
Oilseeds fell on Tuesday to their lowest level in more than three months, undermined, once more, by the prospect of a historic harvest, boosted by Brazil.
On the demand side, notes Arlan Suderman, the recent accumulation of stocks by China raises fears that the Chinese market will slow down its purchases in the months to come.
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