Prices of old and new harvest continue to diverge – Analysis of Raw Materials

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Analysis Raw materials

Today 12:30 pm – Foodbusiness editorial team

Traders on the Matif are sending conflicting signals. The last contract of the 2023 harvest cannot make any progress, while the contracts for the 2024 harvest have found their way up. In the US there are some concerns about corn demand.

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The May wheat contract on the Matif closed yesterday €1 lower at €208.50 per tonne. On the CBoT, wheat was once again on the rise, closing 1.6% higher at $5.94½ per bushel. Corn fell 1.2% to $4.37¾ per bushel last trading session on the Chicago stock exchange. Soy moved mainly sideways, closing 0.1% lower at $11.66 per bushel.

Wheat traders on the Matif are sending conflicting signals. The May contract – the last contract for the 2023 harvest – is under some pressure. A large supply of wheat on the European market, partly due to disappointing exports and relatively large imports from Ukraine, is cited by several analysts as the reason for this.

Traders are much less certain that the wheat balance remains so broad. The first contract for the new harvest rose significantly last week and closed yesterday at €228.50 per tonne. The spread between the May and September contracts is relatively large at €20. Especially when you consider that the May contract expires in a few weeks.

The news that US President Biden has guided the support package for Ukraine through parliament is also causing some unrest on the grain market. Some analysts suspected that the Ukrainian army was on its last legs. Kiev may therefore be forced to sit down with the Kremlin about peace negotiations. Money and military equipment from the US are a boost for Ukraine, but also increase the chance that the war will drag on. The difficulties for Ukrainian farmers with grain exports, low prices and labor shortages therefore continue.

Declining ethanol production
Corn in the US is taking a hit from disappointing export figures. The US has exported 22 million tonnes of corn so far this season compared to 24.5 million tonnes forecast by the USDA. New ethanol production figures were added. Last week, 954,000 barrels of ethanol were produced. That was 983,000 barrels per day a week earlier and 1.3% less ethanol was produced compared to the same week last year. Demand for petrol is lagging even further, with 11.4% less demand compared to the same week last year. According to some analysts, this is a sign that less corn may be needed for the production of ethanol, which is blended into gasoline as a biofuel.