The drought that the EU and the US faced this season may also carry over into next season. Although winter cereals have largely been sown in good conditions, growers in both southern Europe and the US prairies need rain to get the crops up and running. Analysts are also keeping a sharp eye on developments in demand for grains.
Wheat quotations on the Matif and the CBoT were slightly under pressure during the last trading session. On the Matif, the December wheat contract closed €3 lower at €339 per tonne. In Chicago, the December contract gave up 1,4% to close at $8.38,75 per bushel (approximately €312 per tonne). Corn fell 0,4% and soy 1,6% on the American stock market.
A successful corn and soy harvest in the US is putting some pressure on prices, according to analysts. 80% of the soy area has been harvested. The five-year average stands at 67% for this period. The corn harvest is also ahead. 61% of the area has been harvested compared to an average of 52% in the last five years. Winter wheat sowing is also ahead of the five-year average. 79% of the planned area is in the ground. The five-year average is 78%. Developments are lagging behind previous years. 49% of wheat is above compared to 56% in the five-year average.
Drought remains a problem in the US. 68% of the agricultural area has a shortage or major shortage of moisture in the cultivation layer. Last week that percentage was 65%. The sown wheat is dry and we have to wait for sufficient precipitation to germinate the seed.
European corn has dried up
The European JRC published the October edition of the Mars Bulletin yesterday (Monday, October 24). Compared to the September edition of the report, the European corn and soy harvest has been reduced by 1%. The harvest forecast for sunflowers has even been reduced by 4% compared to the previous edition of the bulletin. The average yield of grain maize in the EU now amounts to 6,34 tonnes per hectare. That is 19% below the five-year average. Soy yields remain 18% below the five-year average and sunflowers are 16% behind average this season.
In parts of Southern Europe, drought plays a role in sowing winter grains. According to the JRC, this does not necessarily have to have direct negative consequences for the yield potential. There is a precipitation surplus in the Baltic Sea region. The winter grains are generally sown on time and are in good condition. The lower than average temperature in September has put a brake on growth, according to the JRC.
One point of attention is rapeseed. The optimal time for sowing is at the end of August, but due to drought, farmers in important growing areas have waited to sow. Rain fell in September, but due to wet conditions, growers were unable to get into the fields on time everywhere. Part of the rapeseed area was therefore sown too late.
The trade also keeps an eye on developments in the demand for grains. Due to, among other things, logistical problems in the Black Sea region, but also a low water level in the Mississippi, stocks are being built up unintentionally. US soy exports performed better than trade expectations last week, while corn and wheat exports lagged somewhat behind trade expectations. That makes some analysts nervous about the development of demand. Increasing inventories, in combination with falling prices, can put a brake on demand.