Grain prices are holding up well

Weather conditions remain a cause for concern, despite some rainfall in both Russia and the United States. In North and South America it is too dry and in Europe the temperatures are too high for the time of year. Sowing of winter wheat and winter barley is more advanced in France than at this time last year. Market bureau Agritel does point out that in France at the time, rain had caused a lot of trouble. Winter wheat sowing is around the five-year average.

Corn and wheat futures markets

The futures market in Paris had to see some decline in wheat and corn prices in the last week of October. This was almost entirely made up in the past week. The price for the first-ending corn contract (January 2021) rose in small steps to a € 3.50 higher level. Wheat scored € 208.75 for the December contract last Friday. That is a plus of € 3 in a week. In the futures market in Chicago, the recovery in corn and wheat prices remained modest. Here, the market started somewhat down again on Monday 9 November. The wheat price remained somewhat stuck in Chicago, but the decline of the previous week did not continue. The futures market was calm on all fronts at the end of last week, pending the outcome of the presidential election.

As good support for the corn price, China continues to import a lot. The Chinese ministry of agriculture has indicated that the country has had an insufficient supply of maize from its own production in recent years, which has been offset by sales from the state reserves. Since May, that has been 57 million tons, the United States Department of Agriculture USDA’s Foreign Service (FAS) reports. No more auctions are planned in the coming months. It is forecast that in the current 2020/21 season, China will import around 22 million tons of corn, instead of the previously budgeted 7 million tons, in order to keep domestic prices under control and also to replenish some of the stocks. Import growth is also expected for the following season.

Chinese corn imports

The United States will provide a substantial part of this need. China has committed 10 million tons there, of which only 2 million tons have been delivered. Ukraine must also be considered able to ship a lot to China. That will take a while. The Netherlands Enterprise Agency reports that in Ukraine the domestic prices of maize are very high. Producers argue for an export stop. The corn of 75% of the acreage is indoors. The hectare yields are disappointing.

Exchange rate developments affect grain prices. For example, the Russian ruble and the Brazilian real depreciated further in October. The dollar went up and down quite a bit. For the Chinese importers of corn, among other things, it is a stimulus that the Chinese yuan has become more expensive in recent months.