Wheat prices will continue on Monday, July 19, where the price ended Friday. Droughts in North America and Russia in particular are currently feeding the market. In the US, spring wheat is heading for a crop failure.
It remains extremely dry and also very hot in the northern part of the US and Canada. As a result, the US is forecast to have the smallest spring wheat harvest in 33 years. That news is no longer new, but the fact that this type of weather continues is causing the grain market to re-examine the situation. Last week's Wasde figures are again analyzed and assessed.
Russian harvest decreases
There are now also reports from Russia that dry and warm weather can cause lower wheat yields. During this season, a record harvest was always expected. Market agency Ikar has now lowered its forecast by 2 million tons and other analysts are likely to follow suit. There is certainly no question of a very bad situation – such as in the US and Canada. Yet the different voice has an immediate impact on the market after weeks of yield increases.
The increase in the Paris wheat quotation by more than €15 per tonne was partly fueled by severe weather in Western Europe. On Monday afternoon, the September contract is trading higher again at €216,25. An increase of €2 per tonne. The December contract also received an additional €2. Yet this news is slowly disappearing from the market. However, there are still doubts about the quality of wheat in France, Germany and other European countries. It is lower due to precipitation.
Corn and soy
Dry and warm weather in the US not only means less wheat; Corn and soy are also not doing well everywhere. About 20% of the area of both crops is subject to drought stress. Coupled with a demand market, this creates more sentiment in both markets. On Monday afternoon, the price of corn on the CBoT was lower, but that of soy was higher. The demand is also physically noticeable. For example, China is on the market to buy raw materials.
The price of wheat in Chicago is at its highest level since mid-May. The growth at the end of last week was the largest in 6 years. In Paris, the price of the September contract was at the highest level since June 2. A write-down of the Russian grain harvest immediately causes a price increase in the physical market.
Waiting for harvest
The weather will continue to play a leading role this and next week. Summery weather this week ensures that the grain harvest in Europe can continue cautiously. Winter barley is not yet available everywhere in the country. In the Netherlands, grass seed is mainly on the programme. The wheat will last at least another 10 to 14 days. Protein percentages are considerably lower due to the dark and wet weather. This is visible in barley and that is also the story with wheat. This means there is good demand for high quality wheat. The floods in Germany, the Netherlands and Belgium are currently causing problems for freight traffic on the rivers.