Precipitation on the European continent ensures that market offices remain positive about the upcoming wheat harvest. Dries and especially cold do have an effect, but mainly slow down growth. Due to the high demand and high maize price, the market is able to absorb this news well.
After a week with days off and many holidays, the wheat market can take a position this week. On Friday, the Matif closed slightly more positively at €218 per tonne, meaning the price has now fallen by €7 per tonne since its peak on May 14. On Monday the stock market opened a few euros lower and is trading again around the €215 level in the afternoon.
Cold costs half a million tons of wheat
Rain in Europe and slightly warmer weather provide a positive outlook. The French government agency France AgriMer estimates the wheat harvest in the EU-27 to be about 8,5% larger than last year. Cold and drought cost 500.000 tons of wheat yield in that country, but in Germany and Romania, for example, the grains are in good shape.
This also applies to Ukraine and Russia. The influential market agency Sovecon increases its forecast for the Russian wheat harvest to 81,7 million tons. That was still more than 76 million tons in February. It is mainly a larger area of spring wheat that ensures a new increase. Despite the variable export tax, arable farmers are still tempted by high wheat prices and excellent exports.
Export almost exhausted
In the current export season (until March) Russia exported 34,6 million tons of wheat. That is 22% more than in the same period a year earlier (28,3 million tons). Egypt is the largest buyer of Russian wheat with a volume of 7,7 million tons. This is 34% more than a year earlier. Turkey is in 6,4nd place with 2 million tons and Bangladesh in 3rd place. Exports in April are expected to be more than half a million tons, bringing the total to 35,1 million tons. This is 98% of the total potential. The country still has 700.000 tons of wheat to sell in May and June.
In the meantime, physical prices in the old harvest market remain firm in Russia. The high price level of the new harvest is also striking. It sells for $272 per tonne. Only $6 less than the old crop. This price level is expected to decrease quickly as more farmers start selling their harvest. Prices for the last remnants of the old harvest are also rising in Europe. The quotation of EU feed wheat in Rotterdam is €253,50. This is higher than the €247 achieved in 2010. The regional stock exchanges are also all showing increases.
More grain from Ukraine
Yield figures in Ukraine remain unchanged this month according to analysts from market agency APK-Inform. The total grain harvest amounts to 73,6 million tons, which was 64,9 million tons a year earlier. The volume consists of 27,6 million tons of wheat, compared to 24,9 million tons last year. The harvest of grain maize is estimated at 35,7 million tons. Last year that was 30,3 million tons. There are regular showers in the country, which helps crop development.
Crops in Europe are not lacking in moisture this month. Slightly warmer weather is expected in early June, although the weather remains changeable. The expectations for Romania are also good. Together with France, it is the largest exporter of wheat to the Middle East. Last year the harvest was almost 40% smaller due to a massive drought. The winter was mild in the country and spring brought sufficient precipitation. Together with a slightly larger acreage, the harvest expectation is now excellent. This country is the first to start the new harvest in Europe, around June 20. Due to low temperatures this spring, the harvest is later everywhere, which can sometimes cause tension around the last loads of old harvest.