Larger production has barely any effect on wheat price

Even higher production figures have little effect on wheat prices in the futures markets. The figures in the Wasde report turned out to be slightly higher than expected, but the market barely reacted or not at all. The market took the new flood of figures yesterday with indifference. The effect on prices is negligible. The most traded March contract fell by the smallest possible margin (a quarter of a dollar cent) to $5.34½ per bushel. This means that trading in this contract closed at €169 per ton, placing the price level about €2 per ton lower than last week. The developments from yesterday indicate that the market is saturated and that the higher production expectations have already been factored into the pricing. Even a further increase in expected global stocks did not change the traders' indifferent stance. Possibly playing a role in this is that the figures for wheat in the United States showed no difference from last month. There was also a slight price decline in Paris yesterday. The Wasde figures had no effect there, as the report was released only after the market closed. The most traded March contract dropped by €0.50 to €190.25 per ton yesterday. This keeps the futures market price just above €190 per ton. At the end of November, the March contract briefly fell to €188 per ton, but since mid-November, the closing quotation has been sticking quite firmly to a level very close to €190 per ton. Argentinian export duties down What is not helping price formation in the wheat market, besides the high production figures, is the fact that Argentina is going to lower export duties on grain. For wheat and barley, the duty will decrease from 9.5 to 7.5%. This reduction will stimulate the export of wheat from the country. Wheat farmers in that country could use this support, as they are harvesting a record crop. The Wasde report shows an increase in production for Argentina compared to the estimate from last month, rising by 2 million tons to 24 million tons of wheat. Last season, the Argentinians harvested 18.5 million tons, and the year before that, just under 16 million tons. These differences are significant, and therefore the country has also made a considerably larger quantity available for export this season. According to the Wasde, exports this season will increase to 14.5 million tons. Domestic consumption is also expected to rise to just under 8 million tons. The use in animal feed, according to Wasde, will more than double to about 800,000 tons. Therefore, animal feed plays a limited role in Argentine wheat consumption. In the European Union, 50 million tons of the total 114.5 million tons of consumption end up in the mouth of an animal.