Analysis Grains
Drought regions in the US expand further
A substantial order for wheat from Algeria and increasing drought in the US did not improve the mood in the wheat market. In fact, both in Paris and Chicago, the market took a step back. The European Commission provided an update on the wheat balances yesterday. Rabobank foresees a bumper crop for soybeans in Brazil. According to the bank, the late start of the growing season may not be detrimental to the yield.
The December contract for wheat on the Matif closed €1.25 lower at €218 per bushel yesterday. Wheat on the CBoT closed 0.5% lower at $5.70½ per bushel. Corn also closed slightly lower, but the loss was limited to 0.2%. The December corn contract on the CBoT closed at $4.10¾ per bushel. Unlike grains, soybeans took a step up and closed 0.6% higher at $9.82½ per bushel.
According to various sources, Algeria has secured 480,000 to 500,000 tons of wheat in the tender that closed yesterday. The price averages around $263 per ton C&F (cost and freight). Most of the wheat comes from the Black Sea region but not from the countries that are most active. The bulk is expected to come from Bulgaria and Romania.
Soft price floor
Russia is becoming less certain about the self-imposed minimum prices. According to sources, Russian exporters are currently at $230 to $235 per ton for wheat FOB (free on board). Last week, the Ikar price was at $237 per ton, and the price floor for October is set at $240 per ton by the exporters and the Russian Ministry of Agriculture.
Yesterday, the European Commission reduced the wheat harvest estimate by 2 million tons to 112.6 million tons. The expected export for the 2024/25 season has been lowered by 1 million tons to 25 million tons. The EU has exported over 7 million tons of wheat so far. The EU's ending wheat stocks have been reduced by 1.3 million tons to 10.4 million tons.
In the US, drought in the wheat-growing regions is expanding once again. 62% of winter wheat is now in areas experiencing drought. The key winter wheat states of Kansas, Oklahoma, and Texas are largely affected according to the new drought monitor. The rain over the past weekend provided little relief.
Bumper soybean crop
Rabobank expects soybean acreage in Brazil to increase by 1.5% to 47 million hectares in 2024/25. Earlier this month, the Brazilian government agency Conab predicted a 2.8% growth in acreage to 47.3 million hectares. The Chinese state-owned company Cofco anticipates an acreage of a modest 47 million hectares. An expansion in Brazilian soybean acreage is highly likely. However, the acreage expansion is slower than in recent years. Conab mentions it as the smallest expansion in six years.
Sowing of soybeans in Brazil is progressing at a slower pace due to rainfall. According to Rabobank, this will not affect the final yield. The bank's analysts expect a record soybean harvest of 167 million tons. Interestingly, Rabobank estimates the corn harvest to be 3 million tons higher than last season at 125 million tons. The majority of corn in Brazil is grown as a second crop after soybeans. Delayed soybean planting means corn planting will also be delayed, which can impact yields.
Although Brazil has experienced drier weather in recent days, soybean planting is not progressing smoothly everywhere. 'Those who have never been stuck, cast the first stone,' loosely translates the tweet below.
