The US wheat crop is the second smallest in the past 1,65 years, the USDA announced Monday. The reason for this is the drought on the so-called Plains in the Midwest of the country. The USDA expects the wheat harvest to eventually reach 7,5 billion bushels, 3,6% less than the previous estimate and just XNUMX million bushels higher than last year's crop.
Spring wheat and durum together totaled 546 million bushels (14,86 million tons) this year, 48% more than last year. However, this increase was not enough to compensate for the winter wheat crop decimated by drought. The 2022 and 2021 harvests are the smallest since the 1,606 billion bushels (437 million tons) in 2002. Between 20212 and 2021, an average of 1.987 billion bushels (540,7 million tons) of wheat were harvested annually.
The USDA's Crop Progress report was released Monday afternoon. The maize harvest is slower than expected, but soy is ahead of schedule. Maize has been harvested for 20%, where 22% was expected. Soy has been harvested for 22%, where traders were counting on 20%. Sowing of winter wheat is going slower than expected and is now 40% complete. Traders were counting on 44%.
Brazil
In Brazil, rain delays soy sowing. Last Thursday, 3,8% of the total area of soy was sown, that was 4,1% a year ago, AgRural reports. The consultancy Safras & Mercado has a more positive view and estimates that 4,5% of the total area of soya was sown on Friday. Above 4% from a year ago and well above the five-year average of 3,1%.
The Brazilian government expects a record yield of 150 million tons of soybeans this season and a record harvest of 125,5 million tons of corn. Provided the weather doesn't throw a spanner in the works. StoneX expects Brazilian soybean production to reach 153,8 million tons and the total corn harvest to 126,3 million tons.
Manure
In order to prevent shortages and high prices in the future, the UN wants to take measures to bring the price of fertilizers down. This is reported by Reuters citing a UN official who is involved in talks to improve Russian exports of fertilizers such as ammonia. The UN fears that if the export of these materials does not become easier, the high prices could eventually lead to a lack of availability.
Russia is one of the largest exporters of fertilizers in the world and supplies potash, phosphate and nitrogen. The country produces 13% of the total amount of fertilizers. Exports from the country fell by 22% in the first half of the year. Although Russian fertilizer exports have been lifted since the Black Sea Agreement, there are still obstacles in the way, according to Russian President Putin. Those obstacles are likely to be one of the topics of discussion for the extension of the grain deal, which has a duration of 120 days.
Financiering
Meanwhile, Russia appears to have found a buyer for some of its record wheat crop. Reuters reported Friday that Algeria has purchased 300.000 tons of wheat, mainly of Russian origin. The country is also considering providing financing to importers of Russian grains. To that end, the country is working with Eximbank and Russia's Export Credit and Investment Insurance Agency "to provide financing to foreign companies for the purchase of our products," agriculture minister Dmitri Patrushev told RBC business magazine. “This gives us the opportunity to sell large quantities.” The biggest buyers of Russian grain are Egypt and Turkey.
Importers of Russian grains currently pay in rubles or in their local currency and the number of these deals is growing every month. Russia would like to conclude more trade contracts where payment is made in rubles and is in talks with importers from Turkey, Egypt and Iran. Patrushev also discussed the partial mobilization of the Russian army and its impact on the busy harvest season and said his ministry would make efforts to ensure the smooth running of agriculture.
Since July 1, 2022, Russia has supplied 8,3 million tons of grain to foreign markets, according to Patrushev. That is less than a year ago, the expectation is that this physical backlog will be largely made up by the end of the year. Revenues from Russian agricultural exports will be $40 billion this year, up from $37,1 billion a year ago.
Pricing
The December wheat contract on the CBOT opened high today at $9,16 per bushel (€341,10 per tonne), after closing at $9,12 per bushel (€339,61 per tonne). At the end of the morning, the price stands at $9,18 per bushel (€341,73 per ton). The November soybean contract closed Monday at $13,74 per bushel (€511,50 per tonne) and opened at least lower on Tuesday at $13,74 per bushel and stands at $13,79 per bushel (€513,15 per tonne) by late morning. tons). The December corn contract closed and opened at $6,88 per bushel (€274,65 per tonne) and stands at $6,83 per bushel (€272,66 per tonne) at the end of the morning.
In Paris, the price of the December wheat contract on the Matif stood at €351,75 per tonne at the start of the trading day. The December corn contract opened at €340,25 per tonne.