Justas Eimontas. Anxiety returns to the world grain markets

The latest report from the United States Department of Agriculture (USDA) brought several surprises, pushing grain markets to heights not seen for a long time. Among these surprises are not only lower wheat stocks but also the historically smallest wheat harvest in over 50 years.

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The long-unseen rally in MATIF exchange prices is also supported by active military actions in Ukraine in the Sea of Azov and the closure of the Kerch Strait. Of course, markets react very sensitively to such actions. On the other hand, although the wheat harvest is forecasted to be good both in Europe and the Black Sea region, prevailing tensions largely overshadow such news.

Corn stocks have also been noticeably reduced – more than the market expected. Finally, unfavorable weather forecasts and high heat in the US “corn belt” region also influenced such a sharp dynamic.

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Different moods in different countries

The heat has not spared – and still cannot spare – the European Union, especially France. The condition of corn crop areas grown there is drastically deteriorating: only 48% of the areas stand out with good or very good quality. For comparison, the 5-year average is 81 percent.

However, on the other side of the Atlantic Ocean, the situation is radically opposite. Brazil’s National Supply Company (CONAB) continues to calculate a record corn harvest: it is estimated that it may reach 141.7 million tons.

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