A significantly lower wheat harvest in Canada could not prevent wheat prices from falling for the fourth day in a row. A new grain deal agreement continues to push the market down. Although an extension is a long way off and the logistical problems are not getting any less, Ukrainian farmers do not intend to sow less winter wheat.
The September wheat contract on the Matif closed yesterday (Tuesday) €3,50 lower at €225,25 per tonne. In Chicago, wheat fell 3,1% to $5.68 ¾ per bushel. Corn also fell 1,9% to $4.69½ per bushel last trading session. Soy also closed in the red and recorded a minus of 0,9% to 13.82 ½ per bushel.
Wheat prices in both Paris and Chicago remain under pressure and fell for the fourth day in a row. While Canada announced yesterday that the wheat harvest was significantly lower than the previous season. Statistics Canada estimates the total 2023 wheat harvest at 29,4 million tonnes. That is a decrease of 14,2% compared to 2022. On the other hand, the export of soft wheat in Europe is slow. Until August 27, the EU exported only 4,49 million tons compared to 6,31 million tons on the same date last year. Developments regarding a possible solution for exports from the Black Sea region and the relatively ample supply of wheat continue to dominate the market. Cheap Russian wheat on the world market is also depressing the market.
While Canada's statistics office estimated a significant reduction for the wheat harvest, the harvests for corn and soybeans are actually higher compared to 2022. For the corn harvest, the statistics office expects an increase of 2%, resulting in 14,8 million tons. The soy harvest is estimated at 6,7 million tons, an increase of 3% compared to the previous season.
Grain deal extension
Turkey has long been pushing for a new grain deal regarding exports in the Black Sea region. Turkish President Erdogan wants to agree on a new grain deal and hopes that a new, better phase will dawn in exports. Russia is currently targeting part of Ukraine's infrastructure and crop exports with drones. According to a spokesperson for the Turkish president, Erdogan may go to Russia on September 8 to meet with Vladimir Putin to revive the grain deal. However, an extension is still far away.
Despite the logistical problems, low profit margins for grain and uncertainty about the development of exports, Ukrainian farmers are likely to sow the same area of winter wheat as for the 2023 harvest, the Ministry of Agriculture expects. The area contained approximately 2022 million hectares in 4,1. But if the grain deal is not extended, part of the grain harvest will not be exportable. For the 2023 harvest, it is already an illusion that all grain and oilseeds destined for export will cross the border. The Ukrainian agricultural council announced last Tuesday that 20% to 30% of the total grain area will be forced to decrease because export is simply not possible.