“The dry weather is a concern for wheat sowing in Russia and for soybean sowing in Brazil,” summarizes Sébastien Poncelet, from the Argus Media France firm.
“In the background, there is a small wave favourable to the purchase of raw materials, linked to the US central bank cuts rates and the announcement of economic stimulus measures in China,” he said.
The price of American corn rose on Tuesday to its highest level in almost three months and that of soybeans reached a peak in almost two months.
About 0.9% of the area dedicated to soybeans has been sown, according to Brazilian consultancy AgRural, compared to 1.9% at the same time last year. This figure masks disparities because planting is in full swing in the southern state of Parana, which received abundant rainfall last week, while other states such as neighboring Mato Grosso are still suffering from a hot and dry weather.
Some observers are concerned about the increased presence, especially in the south, of leafhoppers (chicharrita). Favored by rising temperatures, this insect attacked Argentine corn a few months ago, leading the Buenos Aires Stock Exchange to revise downwards its harvest forecasts for 2024.
For Dewey Strickler of Ag Watch Market Advisors, the rise in prices of American corn and soybeans is also explained by “the strike which threatens ports from the East Coast (of the United States) to the Gulf of Mexico.”
In the short term (the strike) could raise prices, “but in the long term, it would be bad” for American farmers, since these ports handle the bulk of the country’s corn exports, the analyst notes.
This would, in fact, force producers to store rather than exportwith the risk of no longer being able to sell the goods once the strike is over.
Wheat “yo-yo”
However, analysts do not see prices changing much in the coming weeks.
“I don’t see any reason for the market to move one way or the other. Rain or no rain (in Brazil), it doesn’t matter until mid-October. Soybeans can be planted after that,” said Jon Scheve of Superior Feed Ingredients.
As the corn harvest begins in the United States, Dewey Strickler also sees prices “moving within tight margins.” And “once the harvest is complete, It all depends on demandwhich is pretty average at the moment,” he notes.
For wheat, he adds, the very good American exports of the bread cereal (+36% compared to last year) are explained by the drought in australiain Argentina and the Black Sea, but also by the decline of the dollar. The United States sells to Asia (Japan, the Philippines, South Korea and Vietnam) and to Latin America.
Despite the dynamics of American wheat exports, Jon Scheve does not see the price going beyond $6 per bushel: “There is so much wheat in the world; below $5.50, American wheat becomes much more attractive.”
On the European market, wheat prices continue to “yo-yo”, climbing after a attack in the Black Seadescending to try to gain competitiveness against Russian prices, notes broker Damien Vercambre.
The price of a tonne of soft wheat was trading on Wednesday at around 220 euros, with little change over 8 days. In Europe, “we are 15 or 20 dollars too expensive in milling wheat compared to the Black Sea”, he judges.
On the other hand, rapeseed prices, flirting with 480 euros per tonne on the November deadline, are benefiting from the dynamics of oilseeds: both that of soya, due to the dry weather in Brazil – and a “big “firmness boost” from palm oil in Kuala Lumpur.
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