Analysis Grains
Rain slows down the Brazilian soybean harvest
The European export of wheat is still not going very smoothly. There is a strong demand for soybeans in the EU, as the latest export figures show. In Brazil, the soybean harvest is slow to start due to rain. Argentine farmers are enthusiastic about exporting additional soybeans. The lower export duty is having an effect according to the Buenos Aires stock exchange. Russia is expected to export less grain this season, as predicted by the chairman of the Russian Grain Union. He also warns of a higher risk level for the upcoming harvest due to a moderate condition of the winter grains.
The March contract for wheat on the Matif closed €4.25 higher at €229 per ton yesterday. Wheat also made a jump on the CBoT, rising by 1.8% to $5.45¼ per bushel. Corn also saw an increase of 0.7% to close at $4.85¼ per bushel. Soybeans remained unchanged at $10.45 per bushel.
The European wheat export continues to lag behind last season. Up to January 26, 12.18 million tons of wheat have been exported compared to 19.35 million tons in the same period last year, according to the European Commission's data. Europe is doing well in the soybean market. This season, 8.03 million tons of soybeans have been imported compared to 7.11 million tons last year. Soybean meal is even more in demand with an import of 11.26 million tons, up from 8.63 million tons last season.
Rain halts combines
The soybean harvest in Brazil is not progressing well. According to AgRural, 3.9% of the soybean area in Brazil was harvested last week. At the same time last year, 10.8% had been harvested. "In Mato Grosso, drier weather helped start the harvest, but work is still behind," writes AgRural. The bureau also notes that soybeans are being delivered with relatively high moisture levels. AgRural lowered its yield expectation for soybeans in Brazil by 500,000 tons last week compared to the December forecast, to 171 million tons.
Dry and stable weather is welcome for the progress of the soybean harvest according to AgRural. On the other hand, it can also lead to reduced yields. Due to a wet spring in the southern hemisphere, some soybeans were planted late. If there is little rain now, as currently predicted by weather forecasters, the crop may not have enough growing days for maximum yield.
Argentine farmers could bring 5 million tons of soybeans from stocks to the market in the coming months according to analysts at the Buenos Aires Grain Exchange. Argentina reduced the export duty on soybeans from 33% to 26% for the period until June 30. This is an incentive for Argentine farmers to bring approximately half of the 10 million tons of soybeans still in silos to the market, as indicated by the Buenos Aires stock exchange.
Greater risks
Russian grain exports are likely to fall below 50 million tons this season. This forecast is made by Arkady Zlochevsky, chairman of the Russian Grain Union, to the Russian state news agency Tass. "We are lowering our export forecast to below 50 million tons, to around 47 to 48 million tons." Of the total export, 41 to 42 million tons are wheat. Zlochevsky envisions a grain harvest of approximately 125 million tons in the best-case scenario for 2025. "For that to happen, we need to sow summer grains on time and there should be no damage to the winter grains." The latter is not yet certain. 37% of the winter grains are in poor or moderate condition, compared to an average of 15% to 20%. "This is a high percentage, but it doesn't necessarily indicate further development. It mainly indicates a high level of risk." Due to a relatively mild winter so far with thawing snow providing moisture, Russian wheat is barely making it through. However, it is still uncertain how the moisture reserves will be built up in the coming spring.
