Dam attack also makes grain market nervous

The United States Department of Agriculture (USDA) released the new Crop Progress report, Gleoglam with the crop monitor and Australia with a yield estimate for the 2023/24 harvest. The September wheat contract on the Matif closed yesterday €6,50 higher at €230,50 per tonne. On the CBoT, wheat prices were also on the rise, closing 0,8% higher at $6.24 per bushel. Soy yielded 0,2% lower, reaching $13.50 per bushel. The loss was even greater for maize. The July corn contract fell 1,9% to $5.97½ per bushel.

The war in Ukraine has also shaken the grain market. This morning the Nova Kakhovka dam on the Dnieper River in the Kherson region was blown up. The reservoir is important for the water supply of the Crimean peninsula, annexed by Russia in 2014, and for the cooling water supply of the Zaporizhia nuclear power plant, which is also under Russian control. There are therefore great concerns about the consequences of the dike breach. The area downstream is at risk of flooding and poses a threat to approximately 22.000 people living across 14 villages, according to the Russian news agency Ria. In addition, there are concerns about the cooling water supply of the Zaporizhia nuclear power plant, the largest nuclear power plant in Europe.

The UN's International Atomic Energy Agency (IAEA) said on Twitter that there is 'no immediate safety threat' to the plant. The situation surrounding the nuclear power plant has been described as worrying by both the Russian authorities and the Ukrainian atomic agency. It is not yet clear who is behind the blowing up of the dam. Both Russia and Ukraine accuse each other.

Drought is rampant
In addition to the war violence in Ukraine, weather reports are also strengthening the grip on the grain market. Yesterday the USDA released the new edition of the weekly Crop Progress report. The sowing of corn and soy in the US is largely over. Of the planned corn area, 96% is in the ground versus 91% of the five-year average and 91% of soy is seeded versus the five-year average of 76%. While dry weather accelerated the sowing of these crops, rain now has to fall to get the crop going properly. Soy can easily recover if significant rainfall only occurs later in the month, but corn is already lagging behind. The area rated good or excellent by the USDA has dropped 5 percentage points compared to last week to 64%. By comparison, the good/excellent rating was 73% last season.

The USDA has not made any major adjustments for winter wheat. 93% of the planned spring wheat area has been sown, which is equal to the five-year average. The condition of the winter wheat has improved slightly compared to last week. 36% of the area receives a good or excellent rating compared to 34% last week. Winter wheat harvest is off to a cautious start in the US with 4% of the acreage harvested in the past week. That is equal to the five-year average. In Texas, 29% of the area is threshed, followed by Oklahoma and Arkansas with 15% and 14% respectively.

Good growing season in Europe
The concerns about drought in the US are also partly confirmed in the Geoglam crop monitor. In the latest edition, released this week, large parts of the prairies in the US and Canada are colored yellow or orange. The Midwest remains colored green. In large parts of Central Europe, on the other hand, growing conditions are excellent according to the crop monitor, which is largely based on satellite observations. Drought remains a major problem on the Iberian Peninsula and parts of North Africa. Australia has had three top harvests, partly due to the La Niña weather phenomenon, but the cards for the coming harvest are less favorable. This can be seen in the crop monitor and was also confirmed today in the winter grain estimate from the Australian Ministry of Agriculture. For the 2023/24 season, the ministry estimates the winter wheat yield at 44,9 million tons. That is 34% less than last season's harvest and 3% below the ten-year average wheat harvest of 46,4 million tons.