Analysis Grains
Wheat struggles to find its way upward
The signs are there that wheat could still move up a notch. A rally just doesn't seem to materialize. After reports of disappointments in Russia, sentiments were further tempered yesterday by positive expectations for the wheat harvest of 2025 in the EU. Reports of good yields in Australia are also not favorable from the farmer's perspective.
The March contract for wheat on the Matif closed €3.75 lower at €329 per ton. On the CBoT, wheat took a significant step back by 1.5% to $5.33 per bushel. Corn edged up by 0.8% to $4.40¾ per bushel. The biggest gainer in the last trading session was soybeans with a 1.2% increase to $9.63 per bushel.
For European wheat growers, there is little honor to be gained in terms of price formation. After the challenging 2023/24 growing season, the price does little to compensate for the lower yields and quality issues. Reports that less wheat will come from the Black Sea region in the second half of the export season provide some support to the market but are insufficient to trigger a real rally. The moderate condition of winter grains in Russia and Ukraine adds some tension to the market but does not really drive the price up.
From a farmer's perspective, it is somewhat remarkable that a report from Strategie Grains seems to have more impact on the market. The French market agency expects the 2025 wheat harvest in the EU to be 11% larger compared to 2024. The increased wheat yield in Europe is largely due to an expansion in acreage. The autumn and winter have so far progressed reasonably according to plan, resulting in a higher potential yield compared to the previous season.
Tightness in the world market
The Strategie Grains report also contains some fodder for the bulls in the market. Despite the larger harvest foreseen for the EU, the world market for wheat remains 'fairly tight'. The market analysts of the agency point, among other things, to the precarious state of winter wheat in Russia. Compared to last year, Strategie Grains anticipates higher prices for both wheat and barley.
Further dampening the mood in the wheat market are the favorable prospects in the southern hemisphere. In Australia, the combine operators can go full throttle. A week of dry weather is forecasted in the major growing regions. Preliminary figures indicate relatively good wheat yields in Argentina, bringing some calm to the market.
Soybeans and (where already sown) corn are also looking relatively good in South America. With no major deviations in the weather forecasts for the next two weeks, there is unlikely to be any change. Strong demand for corn and soybeans from the US weighs more heavily for traders than the good harvest forecasts for South America.
