U.S. figures give grain market new boost

The grain market got a boost on Tuesday from new figures from the United States Department of Agriculture (USDA). Both corn and wheat closed higher in Chicago after U.S. stocks turned out to be lower than expected. For corn, that support comes on top of growing concerns about the European harvest. Wheat closed on Tuesday on the Matif futures market in Paris €0.50 lower at €202 per tonne. November corn remained unchanged at €225.50 per tonne. The September wheat contract rose on the CBoT in Chicago by 9.5 cents to $5.89¼ per bushel (€190 per tonne). Corn rose on this exchange by 6.5 cents to $4.16¾ per bushel (€144 per tonne). The December contract rose by 6 cents to $4.36 per bushel (€151 per tonne). Soybeans quoted for August 5 cents higher at $11.24¼ per bushel (€363 per tonne). The USDA estimated U.S. corn stocks on 1 June at 5.295 billion bushels (134.4 million tonnes). That is less than the 5.408 billion bushels (137.4 million tonnes) traders had expected. At the same time, U.S. corn acreage came in slightly higher than expected at 95.34 million acres (38.6 million hectares). Normally, a larger acreage has a negative effect on the market, but the smaller stocks made the difference. According to traders, this points to stronger domestic consumption, especially in animal feed. For the European corn market, the American news is only part of the story. At least as important are the ongoing concerns about heat and drought in southern and eastern Europe. France in particular stands out. Small corn harvest in France The French corn growers' organization AGPM warned this week that the national corn harvest could fall by as much as 30% to around 9.5 million tonnes. That would mean the smallest harvest of this century. In Poland, Romania and Hungary as well, drought stress is increasing, while the weather forecasts show little rainfall. Those concerns explain why Euronext corn remains trading close to the contract high. The November contract climbed to €228 per tonne on Tuesday before the market closed almost unchanged at €225.50 per tonne. Traders see European production risk up against ample supply from South America. Brazil is heading for a very large second corn harvest and Argentina is also harvesting above-average volumes. As a result, further price increases are being held back for now. Lower wheat stocks Wheat also benefited from the USDA publication. U.S. wheat acreage came in below market expectations at 42.74 million acres (17.3 million hectares). In addition, U.S. wheat stocks also turned out to be lower than expected. That gave the market support after weeks in which mainly the rapid U.S. harvest and good prospects for Russia determined the mood. Still, the upside for wheat appears more limited than for corn. The first yields in France are mixed, but qualitatively the results are mostly good. Moreover, Argus raised its estimate for the Russian wheat crop this week, keeping global supply ample. The lower U.S. acreage mainly puts a floor under the market. In corn, the weather risks in Europe add an extra risk premium. Soybeans in line with expectations Soybeans moved less sharply. The USDA reported a larger acreage and higher stocks than last year, but these figures were largely in line with expectations. As a result, the market reaction remained limited. Rapeseed came under pressure after Statistics Canada reported a record canola acreage. This improves the outlook for the supply of vegetable oils.