Analysis Grains
European grain export continues to struggle
It will take another 9 months before the wheat harvest 2025 begins in the northern hemisphere. Yet yesterday two yield estimates for the upcoming harvest in Russia were released. We can conclude that the start for winter wheat is not very encouraging. In Europe, wheat exports continue to lag behind last season. With less than two weeks to go until the US presidential elections, the grain trade is already making some assumptions about the possible winner.
The December wheat contract on the Matif once again took a step back yesterday and closed €0.75 lower at €223.50 per ton. Prices on the Chicago exchange were on the rise. Wheat closed 0.7% higher at $5.76 per bushel. Corn was the biggest gainer, up 1.7% to $4.16½ per bushel. Soybeans were not far behind corn, closing 1.1% higher at $9.91¾ per bushel.
The European wheat export continues to struggle. Up to October 20, the EU has exported 7.02 million tons of wheat. That is 31% less compared to the same period last season. Last week, the lag was 29%. Tunisia has secured 125,000 tons of wheat in a tender for $263.50 per ton C&F (franco). Jordan also closed a tender but did not make a purchase.
Winter wheat struggling due to drought
The market bureaus SovEcon and Ikar both provided estimates for the Russian wheat harvest in 2025. SovEcon estimates the harvest at 80.1 million tons. This would be the smallest harvest since the 2021/22 season. Drought is causing problems at the start of the new season. Planting is delayed, leading to lower expected acreage and yield according to SovEcon. "Due to the moderate condition of winter wheat, the risk of winterkill is increasing," writes Andrey Sizov in the explanation of the yield forecast. Ikar is more cautious in their yield forecast, expecting a harvest of 80 to 85 million tons of wheat.
It will take about 9 more months before the wheat is harvested in Russia, and during that time, anything can happen. The trend of moderate winter wheat development due to drought should be taken seriously, according to analysts. The ample supply of Russian wheat has significantly contributed to the sharp decline in wheat prices after the peak in 2022. This offset the moderate harvests in America and Europe over the past two years.
Election fever
According to various polls, American farmers have a preference for Trump, but traders seem to expect higher grain prices from Harris. Some analysts see Harris leading with two weeks to go until the elections as a 'bullish' signal for grains. Part of this expectation is due to the belief that Harris will be less confrontational in the trade war with China. China is an important market for American agriculture, and the sector is keen to maintain access to that market.
Additionally, it is likely that Harris will continue Biden's somewhat greener course. This is favorable for both soybeans and corn. Ethanol from corn and soybean oil is blended into fossil fuels. Analysts expect Harris to maintain the current subsidy and incentive system for these green fuels.
