Analysis Grains
Rain troubles last part of Russian grain harvest
The final stretch is the hardest. This also seems to apply to the Russian grain harvest. Yesterday, a second region in Russian Siberia declared a state of emergency due to excessive rainfall. France expects to export less wheat due to a small harvest. Additionally, the quality of French wheat is also not optimal. In the US, there is surprise over the limited effect of the Fed's interest rate cut on the grain market.
The December contract for wheat on the Matif closed €0.75 lower at €218.50 per ton yesterday. In Chicago, it was a rather uneventful trading day for grains. Wheat closed unchanged at $5.75¾ per bushel. Corn rose a quarter cent to $4.12¾ per bushel. There was more action in soybeans, which closed 0.8% higher at $10.14 per bushel.
The moderate to poor grain harvest in the EU and sufficient supply from the Black Sea region balance each other out. Russia provided figures on the progress of the harvest yesterday. According to Russian Deputy Agriculture Minister Maxim Uvaidov, almost three-quarters of the Russian grain harvest is complete. Uvaidov informed the Russian news agency Interfax. By September 18, Russia had harvested 102 million tons of grain according to the deputy minister. The total Russian grain harvest is estimated at 132 million tons by the ministry, of which 60 million tons are available for export.
State of Emergency
The harvest of the last grain in Russia is not without its challenges. The state of emergency has been declared today in the Siberian region of Krasnoyarsk, as reported by the Russian news agency Tass. Heavy rains have caused significant damage to crops, Sergei Ponomarenko, vice-governor of the region, told Tass. "According to preliminary estimates, more than 17,000 hectares of crops have been damaged. The estimated damage amounts to more than 280 million rubles (approximately €2.7 million)." Earlier this month, the state of emergency was also declared in the neighboring Tomsk region due to weather damage to crops.
France sets the export expectation for wheat this season at 4 million tons. Last season, France exported 7.5 million tons of wheat. The smaller export is due to the smaller harvest caused by adverse weather during the growing season. The quality of French wheat is also not impressive. Only 28% of the wheat has a hectoliter weight of 76 or higher. 41% of the wheat has a protein content of 11.5% or more, compared to 58% in the long-term average.
Interest Rate Cut
The US Federal Reserve cut interest rates by 50 basis points yesterday. This lowers the value of the dollar and is therefore favorable for US exports. Some analysts find it disappointing that the grain market is reacting very minimally to this. US grains are already relatively competitively priced on the world market, and with the decline of the dollar resulting from the Fed's interest decision, some analysts argue that there should be upward potential for grains.
