Wheat prices came under significant pressure in the past trading week. The USDA's quarterly report in particular caused prices to slide, as both US wheat stocks and the production forecast clearly exceeded market expectations. The winter wheat harvest is now estimated at 1.4 billion bushels, an increase of 3.9% compared to the previous year. Stocks as at September 1 were also at a five-year high of 2.12 billion bushels. The reaction on the stock markets was prompt: prices for SRW and HRW wheat fell noticeably in the middle of the week. Although spring wheat was slightly lower in the USDA report, it remained above expectations. The announcement of the US shutdown, which delayed the publication of important market reports, also had a negative impact. At a global level, Russia made the headlines. A national state of emergency was declared in the Rostov region after a drought damaged the harvest on over one million hectares. It is also likely that Russia is experiencing shortages of diesel due to the constant attacks on refineries by Ukraine. Analysts expect that Rostov will no longer be Russia's leading wheat region for the first time in ten years. Nevertheless, Sovecon's export forecast was only lowered slightly. Euronext followed the weak impulses from overseas. In addition, the EU Commission raised its production estimate, predicting a ten-year high of 132.6 million tons.
The USDA figures also determined events on the maize market. Although the new production estimate remained virtually unchanged, stocks as at September 1 were around 200 million bushels higher than expected at 1.532 billion bushels. The reaction followed promptly with price losses on the CBoT. In addition, record yield expectations and an area-related distorted picture of harvest progress put pressure on the market. In Argentina, the temporary suspension of the export tax led to a sell-off of large quantities of stocks. Corn prices also slipped on Euronext, but showed initial signs of stabilization towards the end of the week.
ZMP Live Expert Opinion
The past week has clearly clouded the market picture for wheat and maize. The latest USDA data shows that stocks are still well filled and new production forecasts provide little relief. Fundamental surpluses are particularly evident for wheat. The geopolitical risks from Russia could have a bullish effect in the medium term, but bearish impulses currently predominate. The maize market appears to be strongly dominated by supply, even if the physical harvest appears to be delayed. Important impulses for both markets are now likely to depend on the weather in the US and the export figures in the coming weeks. As long as the market dynamics are characterized by a high supply situation, a sustained price recovery remains unlikely for the time being.
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