The combo of factors that explains the drop in grain prices

The fear of recession, the rise in the dollar and the possibility of an agreement between Russia and Ukraine so that Ukrainian grain can be exported join forces to make it happen a month of sharp drop in the price of grains, something that did not stop this week.

Despite the fact that crops in the United States are under some climatic pressure due to high temperatures, and that the monthly report of the United States Department of Agriculture (USDA) markedly cut the forecast production of soybeans for that country – slightly increasing the forecast for corn-, the markets remain on the defensive and prices close another week of declines that lead to recalculating the numbers for the 2022/2023 Uruguayan harvest.

The prices offered for soybeans from the next harvest are rapidly moving away from the reference of US$ 500 per tonwhile it is worth celebrating that there is almost no soybean left to sell from this fall’s harvest.

While the soybean harvested this year could be placed at around US$600 per ton, next year’s is being offered above US$460still an interesting price, but with current costs it cuts margins, and especially when there is strong uncertainty regarding the path of future prices.

The prices of wheat and corn in the local market remain firm, due to the low availability. On the one hand, wheat stocks are very low until the next harvest. nIn the case of corn, the second crop harvest progresses very slowly due to the frequent rains.

Wheat manages to exceed US$ 300 in offers for the next harvest and available corn remains close to US$ 400 per ton set in Montevideo.

Rapeseed maintains a significant premium over soybean prices, very close to US$600.

Commercial uncertainty is offset for now by a good production outlook.

While, the rains in the east allow the recovery of the rice dams.

From the fundamentals of supply and demand, no relevant changes have been processed, except for a potential exit of grain from Ukraine, but which is still in full negotiation.

For now the agricultural market succumbs to the wave of fear that also drags other raw materialssuch as oil and copper.