Wheat prices took a step back in both Paris and Chicago over the past trading session. Grain exports from Ukraine and the expected good wheat harvest in Russia put pressure on the wheat market. In addition, the weather is also an important factor. China, which is also under the spell of a heat wave, is taking very drastic measures.
The September wheat contract closed yesterday at €332 per tonne on the Matif. That is €7,75 lower than the day before and the lowest price since the end of July. On the CBoT, the wheat quotation fell by 1,8% compared to the previous closing price. Corn and soy prices also took a step back on the American stock market.
The export of grain from Ukraine put pressure on prices, according to analysts. Although exports are certainly not yet at the level they were before the Russian attack, more ships are cautiously heading to Ukrainian ports to pick up a load of grain. In any case, this will provide some relief to the grain market in the short term. Due to (expected) precipitation in Europe and the US, harvest expectations are improving, especially for corn, soy and spring wheat. This certainly does not solve the drought problems immediately, but it gives the crops, especially corn and soy, some breathing space.
Market agency Sovecon increased the expected wheat harvest for Russia to 94,7 million tons. In the previous forecast, Sovecon assumed a total harvest of 90,9 million tons. The harvest forecast has been adjusted upwards due to record yields in several Russian regions and recent rain. That was just in time for the spring wheat, according to the agency. Exporting wheat is a problem for Russia. Sovecon expects Russia to export 5,8 million tons of wheat in July and August. That is 22% below the long-term average and 28% less compared to last year.
No half measures
Part of the country in China is also experiencing drought. A heat wave has been going on in the country for 64 days now, with temperatures at some measuring stations even rising to 44 degrees Celsius. This is the longest heat wave since measurements began in 1961. Reuters news agency reports that China will implement an emergency plan to bring more water to the drought-stricken area in the Yangtze river basin. According to the Chinese Ministry of Water, the drought is endangering the drinking water supply for people and livestock and causing problems in crop cultivation. Regions should therefore make an inventory of dry areas and plan how to maintain water supplies. For example, by pumping water from one region to another or developing other water sources. Furthermore, more water will be allowed through at the Three Gorges Dam, the largest hydroelectric power station in the world. This makes more water available downstream. The Hubei province in central China goes even further and launched a plan to fire silver iodide cartridges from aircraft to artificially generate showers.