The wheat market continues to struggle a bit. The harvest is progressing steadily in the northern hemisphere, which is putting pressure on prices. The extension of the Black Sea Grains deal is being kept in the dark by Russia as time runs out. There was more action in the corn and soy trade. Market players took a stand around the publication of the Crop Progress report.
The September wheat contract on the Matif gave up €2,75 yesterday to close at €229,25 per tonne. Wheat also took a step back on the CBoT. The July contract fell 0,5% to $6.36¼ per bushel. Corn and soy were on the rise last trading session. Corn added 1,8% to $5.70¾ per bushel and soy rose 1,5% to close at $15.08 per bushel.
According to analysts, the wheat quotation is under some pressure due to the progress with the harvest in the Northern Hemisphere. In addition, American and European exporters face stiff competition from Russia. The wheat harvest in Russia does not appear to be breaking records as it stands now, but threshing is above the long-term average, some sources report.
Whether or not to extend the Black Sea grain deal remains shrouded in mystery. The Russian news agency Tass reported yesterday, based on anonymous sources from the Kremlin, that the chance of an extension of the deal is small. In the same message, one of the sources hinted that the hope for an outcome lies with Turkish President Recep Tayyip Erdogan. And Erdogan announced last weekend that he was pushing for an extension of the deal by three months and not by two as last time. Hurry is required because the current agreement expires next Monday (July 17). On the other hand, we have become somewhat accustomed to the fact that the decision is only made at the last minute by the Kremlin.
Rain at the wrong time
The US Department of Agriculture released the new edition of the Crop Progress report yesterday. Rain on the southern prairies has come too late and is now hampering harvests, the report notes. Not even half of the area (46%) has been harvested. The five-year average for this week stands at 59%. The condition of the winter wheat has remained virtually the same with only minor shifts. Spring wheat in the US has declined slightly. 47% of the area is in good condition compared to 48% last week and 70% this time last year. According to the USDA, barley has improved somewhat and 52% now receives the status of good or excellent compared to 51% last week. Drought in the spring wheat and barley regions in the US and Canada remains a concern for analysts. Some private parties predict that 60% of spring wheat in Canada and 50% in the US will experience stress in the next ten days.
Corn and soy have benefited from last week's rainfall. The adjustment of the condition of the corn in particular comes as a bit of a surprise to several analysts. The rating went from 51% good and excellent last week to 55% this week. By comparison this time last year, 64% of corn in the US was rated good or excellent. In terms of growth, the corn is neatly in line with the multi-year average. 22% of the area is in the panicle compared to 21% in the five-year average. The condition of soy has also improved (slightly) with 51% good or excellent versus 50% last week. Soy growth is slightly ahead of the five-year average at 39% in flowering compared to 35% last season.