Analysis Grains
Chinese customs hinder soy processors
Concerns about the wheat for the 2025 harvest in Russia were insufficient to give the wheat market a boost. In France, grain growers have sown nearly 10% more winter wheat compared to last season. However, the total acreage is not excessive according to the French Ministry of Agriculture. In China, soy processors are not happy with customs. Due to longer waiting times, they are running out of their work stock.
The March contract for wheat on the Matif closed €1.25 lower at €232.25 per ton yesterday. On the CBoT, wheat fell by 0.9% to $5.45. Corn lost 0.3% and ended at $4.43½ per bushel. Soybeans also closed in the red, dropping by 0.5% to $9.76¾ per bushel.
French farmers have sown 6.3 million hectares of winter cereals. This is the preliminary estimate of the French Ministry of Agriculture. Most of this area is filled with winter wheat. In total, 4.5 million hectares of winter wheat have been sown. This is 9% more than last season, but the acreage is relatively small compared to the last thirty years according to the ministry. The barley acreage is 0.8% smaller compared to last season, with 1.2 million hectares. The rapeseed acreage is 0.6% larger compared to last season, estimated at 1.3 million hectares. The corn harvest of 2024 is relatively large. In total, 15 million tons of corn have been harvested. This is 15.5% more than last year and 12.7% above the five-year average.
Smallest Russian wheat harvest in 4 years
From Russia came bullish news for the wheat market. Market agency SovEcon has reduced the forecast for the 2025 wheat harvest by 3 million tons to 78.7 million tons. This would be the smallest harvest since 2021. The largest adjustment in harvest forecasts is for winter wheat. SovEcon estimates that 50.7 million tons of winter wheat will be harvested next season. This is 3.6 million tons less than in the previous forecast. The weather is not cooperating for Russian grain growers. After the dry autumn, the wheat looks poor at the beginning of winter.
There is not much rain expected in the dry southwestern part of Russia. The same goes for the east of Ukraine and Kazakhstan. A silver lining for farmers in the region is that temperatures for this time of year are expected to remain moderate over the next ten days according to weather models. The risk of winterkill is therefore mitigated according to analysts.
Export news from the US was insufficient to support corn and soybeans. The USDA reported a 'flash sale' of 170,400 tons of corn to Mexico yesterday. Soybeans were a bit more in demand with a sale of 187,000 tons to Spain and 132,000 tons to an unknown destination.
Slow customs
In the Chinese province of Guangdong, a shortage of soybeans has arisen in the processing industry due to delays at customs, Bloomberg reported. Efforts by the Chinese government to become less dependent on the import of agricultural products and long waiting times at customs are causing a shortage of soybeans in southern China according to trade sources who spoke to Bloomberg. Customs in Guangdong are taking much longer than usual to conduct quality checks on soybeans. Several processors have had to scale back their production due to limited availability of raw materials. This also affects further down the chain. Feed mills are now facing a shortage of soybean meal. The issues with soybean imports are only affecting Guangdong, where the most soybeans are processed. In other Chinese provinces, customs are operating at normal speed.
China has set a course to become less dependent on the import of agricultural commodities. However, this is not working out so well with soybeans. About 80% of the soybeans the country needs come from outside China. The delays in soybean imports are coming at an unfortunate time for processors. Importers fear further trade restrictions when Trump takes office in the White House in a month.
