In more than 2 months there is a good chance that the combines will again be driving across the country. A crucial phase for the cereal crops comes when moisture is required. Continued drought results in lower European yield forecasts. The weather premium in the wheat price continues to hold.
The French agriculture ministry further adjusts its yield expectations downwards. Only 55% of the grains are in good condition, compared to 80% a year earlier. The Germans are also making their contribution. The Raiffeisenverband adjusts its yield estimate from 22,7 to 22,4 million tons.
Favorable start in the southern hemisphere
On the other hand, expectations in Australia and Argentina have been adjusted upwards due to a favorable start to the sowing and growing season. With all the news about drought, the impact of corona almost gets sidetracked, but nothing could be further from the truth. For example, the number of infections in Russia, especially in remote areas, has increased sharply in the past week.
Speaking of Russia, this country, together with Ukraine, still largely controls the news on the wheat market. Despite rainfall, there is drought damage that is considered irreversible. However, the spread in the harvest volume is considerable between the various analyst firms. This means there is a significantly increased area to take into account. In the far south of Russia, the harvest starts around the turn of the month. This provides an initial picture of a very dry region and how the crops have suffered.
Wet start USA
In North America, the market has swallowed, digested and accepted the Wasde report. The corn area is not in proportion to the use, especially for ethanol. However, it is not expected that arable farmers will soon change their crop plans and sow less grain maize. They have no alternatives. Bulls point to the heavy precipitation and low temperatures, which do little to improve crop growth. 80% is now already in the ground, compared to 45% a year earlier. The Americans remain positive about increasing exports to China, although this has yet to fully mature.
While the weather forecast in the American Corn Belt predicts 14 days of rain, the opposite is true in Europe. Precipitation has fallen recently, but it is not of great significance. Significant precipitation fell in parts of Poland, but given the extreme drought this is literally a drop in the ocean. Romania, the largest EU wheat exporter after France, has now also joined this drought procession. Last year, 10 million tons of wheat were harvested in the country. This year, analysts expect a yield of between 5 and 7,4 million tons. If rain does fall, it will come too late to repair the damage.
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