Analysis Grains & Commodities
European harvest forecasts vary considerably
The weather is one of the most important seasonings in the grain market. France is heading for an above-average harvest, according to a new forecast, mainly due to a favorable growing season. In Germany, the drought of the last few months has hit hard and the growers' organization expects a below-average yield. The weather in the US isn't exactly cooperating either. Where they can use rain it doesn't fall and where the combines are ready they have to wait for solid dry weather.
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Choose the subscription that suits youThe September contract for wheat on the Matif showed the smallest possible decline yesterday at €0,25, reaching €233 per tonne. On the CBoT, wheat lost more after jumping higher on Wednesday. The July contract fell 2,3% to $6.47 per bushel. Soy also took a step back, losing 1,4% to close at $15.25¾ per bushel. Corn did find its way up, gaining 3,4% to close at $5.66¾ per bushel.
Yesterday there was news from France about the wheat yields there. In their joint forecast, market agencies Arvalis and Intercéreales estimate the yield of soft wheat at an average of 7,5 tons per hectare. The yield would therefore be 4,5% above that of last year and 5% above the ten-year average. The protein content of the soft wheat is 11,4%, which is the same as last year and the ten-year average. Grain was sown under favorable conditions according to Arvalis and had sufficient moisture in early spring. In Germany, grains are in a less favorable position. The German farmers' association DBV estimates the grain harvest in Germany at 40,9 million tons. The expected yield is therefore well below the five-year average of 43,6 million tons and even 6% below last season's yield. The smaller harvest is partly due to a shrinkage in acreage, but mainly due to drought in the months of May and June, which has caused the grains to shed a significant coat.
Drought also remains a problem in North America. In the US, drought problems are shifting. It's getting drier in the Midwest, while the southern prairies are finally getting some rain. Unfortunately, the rain comes at a very unfortunate time. In Oklahoma and Kansas, the wheat harvest was already behind the multi-year average and if rain actually falls in the weather reports for the coming days, there will certainly be no catching up. Wetness in a ripe crop also has a negative effect on quality.
Ukraine is looking for publicity
The uncertainty about whether or not to extend the grain deal continues. Since June 26, no new ships have been registered to sail to Ukrainian ports on the Black Sea under the current deal. The port of Constanta in Romania on the Danube plays a crucial role in the export of grain from Ukraine, several sources report citing Ukrainian government officials. Since the start of the war more than a year ago, about a third of Ukraine's total grain exports - which amounted to 49 million tons during this period - have passed through Constanta.
Ukrainian exports were helped by disappointing grain yields in Romania. Because less grain had to be shipped from our own country, there was extra capacity for grain from Ukraine. A much better grain harvest is expected in Romania this season, which is less favorable for Ukraine. In addition, five EU member states (including Romania) have protested heavily against the influx of cheap grain from Ukraine, and not without results, as evidenced by the support package that the EU has created for these countries. That could well be a good explanation for the fact that Ukraine is now so emphatically seeking out the press about the importance of access to the Danube.