While it is rainy and cold in Europe, rainfall in other growing areas has a softening effect on wheat prices. The improved conditions in the United States in particular are bringing wheat prices into calm waters for the time being.
A cold and dry spring in the wheat growing areas of the United States this spring raised fears about the American winter wheat harvest. Significant precipitation in the state of Kansas – the largest wheat state in the country – is causing international prices to slow down slightly. In fact, according to the Wheat Quality Council, crops have not done this well in 20 years. In the northern American areas (and also Canada) where spring wheat is grown, it is still very dry.
Late harvest
Closer to home, grain crops in Southern Europe and the Balkans in particular benefit from rainy weather. In Northwestern and Central Europe it remains relatively cold for this time of year. The crops are developing very slowly compared to the previous 2 years. It will certainly not be an early harvest this year.
The CBoT in Chicago last week saw a downgrade of the July contract by about $10 per tonne to the equivalent of $247,74. The Matif rocked back and forth a little more and managed to hold its own better. The week eventually ended at €212,75 for the August contract. On Monday, May 24, the Paris stock exchange will again write red figures with a price that will touch the bottom around €208 to €209 per tonne. That price was last reached in early April.
Tightness remains
Despite the improved conditions, world supplies remain tight this season. We will certainly notice this next season, even with a more than bountiful harvest. For the EU and the UK, 145,8 million tonnes of wheat are now expected, compared to 141,5 million tonnes. This is due to rain that has fallen in most places. Given the circumstances and expectations, with warmer weather on the way, the price is still holding up well. 79% of French wheat crops are now rated as good to excellent. This time last year it was only 57%.
The grain market is awaiting new acreage figures from the USDA to see whether American and Canadian farmers have sown more spring wheat than previously thought. More than 80% of the grain maize has now been sown, compared to an average of 68% at the end of May. More than 60% of the soy has also been sown, compared to an average of 37%.
Less wheat from Canada
A combination of acreage and drought is thought to cause the Canadian grain harvest to be smaller this season. The latest estimate from the Canadian agriculture ministry AAFC is 31,06 million tonnes. This season it is estimated at 35,2 million tons.
More arable farmers are choosing to sow corn or rapeseed. These crops have seen a bigger price rally than wheat. The area amounts to 9,4 million hectares, compared to 9,94 million hectares estimated last month. The export volume is also decreasing. It remains to be seen how the harvest per hectare will turn out.
It is very dry in the west, but there is sufficient rain in the east. The drought does ensure that sowing can be done quickly and quickly. By mid-May, considerably more had been sown than last year. A smaller Canadian harvest is compensated on the world market by more wheat from Russia.