Biofuel boost for U.S. growers in the final days of Biden’s presidency. Russia’s wheat exports are lower than expected, while inventories decrease, potentially driving up future prices. Argentina’s soybean harvest is unlikely to recover, even with the expected rains.
On January 16, wheat, maize, and soybeans all closed lower across the futures markets. The Matif wheat contracts for March ended €2.25 lower at €226 per ton, while the CBoT saw a 1.65% drop, closing at $5.38 per bushel for wheat. Maize closed 0.84% lower at $4.75 per bushel, and soybeans ended the day 2.30% lower at $10.19 per bushel.
Biden’s Last Days as President Support U.S. Biofuel Production
In one of his final actions as president, Joe Biden signed a rule on January 15 aimed at improving prospects for U.S. farmers in the biofuel market. The new rule establishes a framework to assess greenhouse gas emissions associated with biofuel production while promoting climate-smart farming practices. This initiative is expected to increase the competitiveness of U.S. biofuel producers against major agricultural players such as Brazil, potentially boosting earnings by at least $1 per bushel.
Russian Wheat Exports Lower Than Expected
Russia is expected to export between 1.8 and 2.2 million tons of wheat in January, a significant decrease from the 3.6 million tons exported a year ago, due to lower wheat inventories. SovEcon forecasts that 43.7 million tons will be exported during the 2024/2025 season, representing 95% of the USDA’s projected total. With low inventories and export volumes so far, it is unlikely that USDA projections will be met, and prices are expected to rise as the season progresses.
Weather Conditions Forecast Mixed Harvest Outcomes
The Black Sea region is not facing any winterkill threats over the next seven to ten days. In the U.S. Central Plains and Midwest, light rain followed by cold winds are expected. The majority of continental U.S. states are forecast to experience cooler-than-usual conditions next week, which may affect unprotected wheat zones, leading to winterkill.
Rains are expected in Argentina and southern Brazil, while more limited showers are anticipated in central and northern Brazil. The rain is likely to positively impact Brazil’s already strong harvest and slightly alleviate the drought conditions in Argentina.
Drought Impacts on Argentina’s Soybean and Corn Harvests
Droughts in Argentina’s key producing regions have significantly impacted yields. The Rosario Grain Exchange reports that the soybean harvest has been irreversibly damaged, even with the expected weekend rains. The adverse weather is also likely to affect the corn harvest, reducing the expected yield by 2 million tons, or 4 to 5.8% of last month’s forecast. These conditions, combined with falling prices, pose a serious threat to Argentine farmers, who have requested tax reductions from the government.
