The down mood on the wheat market that started after the extension of the grain deal also continued yesterday. The Matif even dropped to a level we haven't seen in a long time. The market is paying less attention to the downright poor harvest forecast for wheat in the US. Corn and soy are off to a flying start in America, by the way.
The September wheat contract on the Matif gave up €2,25 yesterday, closing at €222,25 per tonne. That is the lowest level since July 2021. Wheat also took a step back on the CBoT. In Chicago, the July contract fell 2,2% to $6.11¾ per bushel. This means that Chicago still remains above the dip seen at the beginning of this month. Corn and soy were also in the red, but the losses here were more limited than in wheat. Corn fell 1,1% to $5.55¼ per bushel and soy added 0,3% to close at $13.33¼ per bushel.
By extending the grain deal by two months, acute concerns about tightness on the world market are subsiding. The UN reported yesterday (Thursday, May 18) that three ships are en route to Ukraine under the terms of the grain deal. Nevertheless, the transport of grain within Ukraine remains difficult. This was once again made clear yesterday by the derailment of a grain-laden train in Russian-occupied Crimea. Train traffic had to be stopped as a result. The derailment of the train was caused by 'interference by outsiders', the Crimean railway company said in a statement.
The Russian Ministry of Agriculture estimates the total grain harvest in Russia at 123 million tons. Of the total harvest, 78 million tons are wheat. The Russian ministry estimates the wheat harvest slightly lower than the American ministry. The USDA put Russian wheat production for the 2023 harvest at 81,5 million tons in the Wasde report.
Moderate demand
The demand for grain on the world market is on the weak side according to several analysts. The weekly corn sales figures in the US are particularly striking. In the week to May 11, this amounted to minus 340.000 tons. The fact that corn sales are negative is due to China's cancellations. Previously noted items are now removed from the list, hence these crazy figures. China is withdrawing somewhat from the American market and is reportedly a buyer of barley in the EU as an alternative to American corn. For soy, China is looking to Brazil, which has just achieved a record harvest.
Farmers in the US could also get a very good harvest in terms of corn and soy yields. The weather is favorable to these crops in the Midwest (the largest growing area). Sowing goes quickly and crops develop quickly. The picture is completely opposite for wheat on the prairies. Earlier this week, the Wheat Tour estimated a historically low wheat yield in Kansas of approximately 2 tons per hectare. However, a relatively large portion of the state's winter wheat will not be harvested at all. The Wheat Tour estimates that 27% of the sown area is not harvested, they wrote yesterday. The USDA previously assumed a record abandonment rate of 18,5%. If the Wheat Tour's predictions come true, Kansas will be heading for the smallest wheat harvest in more than half a century.