The agricultural markets experienced turbulent developments this week. However, wheat and maize prices were able to recover after the previous week's price slide. Technical countermovements in particular provided green signs on Monday, even though fundamental factors continued to ensure restraint. The market was eagerly awaiting the publication of the USDA quarterly report, which ultimately came up with predominantly bearish signals on Tuesday: higher stocks of wheat and solid acreage weighed on prices, as did the rapid progress of the US winter wheat harvest.
The global outlook also played a role. The International Grains Council (IGC) slightly raised its forecast for the global grain harvest and the wheat harvest in particular. At the same time, good weather conditions in Argentina provided a positive outlook for the wheat harvest. The export figures for the USA remained a double-edged sword: although wheat shipments rose significantly compared to the previous week, the start of the season lagged behind the previous year.
Geopolitical issues gained in importance over the course of the week. In particular, a surprising trade deal between the US and Vietnam provided new impetus. The agreement, whereby Vietnam waives tariffs on US goods while Washington retains moderate import duties, was seen on the market as a strategic success - with a direct impact on the wheat market, as Vietnam is a relevant importer. Wheat rose sharply at times and stood at 556.00 US cents/bushel for July, an increase of 18.60 US cents on the previous day.
However, while wheat was unable to increase further towards the end of the week despite stable data and gave up gains from the previous day, maize continued its recovery.
ZMP Live Expert Opinion
The grain market is likely to continue to fluctuate between weather-related uncertainty and global supply signals. Attention is increasingly focusing on harvest conditions in the USA, Canada and Russia - weather-related yield losses could still have a price-driving effect on wheat in particular. At the same time, export pressure remains high, particularly due to aggressive competition from the Black Sea region. Stable demand stimuli from the ethanol sector should provide support for maize. However, if the weather continues to improve in the main growing regions, increasing price pressure is to be expected.
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