Analysis Grains
Russian farmers thresh significantly less wheat
Wheat yields are not only disappointing in the EU. In Russia, farmers are threshing over 20% less wheat compared to last season. There seems to be little attention to the disappointing yields on the futures markets, and more focus on the limited demand. The wheat market was also searching for solid ground yesterday. Corn and soybeans were on the rise on the Chicago exchange. Partly due to a favorable dollar exchange rate and partly due to a few large soybean orders.
The September contract for wheat on the Matif closed €2.75 lower at €202.50 per ton yesterday. Wheat also took a step back on the CBoT in the last trading session. The September contract closed 0.3% lower at $5.28¼ per bushel. Corn and soybeans showed gains on the Chicago exchange. Corn closed 2% higher at $3.78 per bushel. Soybeans followed corn and closed 1.9% higher at $9.56¼ per bushel.
Wheat continues to explore the bottom in the market. This is despite some bullish news yesterday. The Russian news agency Interfax reports, based on data from the Russian Ministry of Agriculture, that wheat yields in the country are over 20% lower than last season. This season, the yield is at 4 tons per hectare compared to 5.1 tons a year earlier. Up to August 14, Russian wheat growers harvested 59.8 million tons. This is 3.2 million tons less than last season according to Interfax. In total, Russian farmers harvested 73.5 million tons compared to 81.7 million tons the previous season. The average yield is at 3.3 tons per hectare compared to 3.7 tons last season. A bright spot, according to the ministry, is that the quality of wheat this season is better than last season.
Despite lower yields, the quotation for Russian Black Sea wheat took a step back. The Ikar quotation decreased by $3 to $218 per ton. SovEcon expects Russia to export 4.6 million tons of wheat in August. In July, Russia exported 3.6 million tons of wheat.
Threshing of summer grains is slow
In the US, the winter wheat harvest is almost complete at 96% harvested according to this week's Crop Progress report. There is still a lot of threshing to be done with spring wheat. Up to August 18, 31% of the area has been threshed. The five-year average for the week stands at 36%. The condition of the remaining spring wheat has slightly improved with 63% rated good or excellent compared to 62% last week. The condition of barley in the US has hardly changed according to the USDA. Just like last week, 69% of the area receives a good or excellent rating. Threshing of barley is behind schedule. 30% of the barley has been threshed compared to 43% in both the five-year average and last season.
The USDA made hardly any adjustments to the condition of corn and soybeans this week. 57% of the corn area receives a good or excellent rating. For soybeans, it is 68% and for both crops, this is the same as last week.
The demand for grains and soybeans is somewhat disappointing across the board according to various analysts. A drop in the dollar to an eight-month low makes US exporters more competitive on the world market. Soybeans received support yesterday from an order from China. The USDA announced that China bought 332,000 tons of soybeans from the US. In addition, 110,000 tons were booked with an unknown destination. This demand is more than welcome in the somewhat struggling grain market.
