Wet conditions in northern Europe, floods and drought in Brazil and drought in Australia. There are plenty of messages that could support the grain market. However, things have turned out differently so far in this trading session.
On the Matif, the December contract for wheat is down 0,1% at the time of writing before the market closes. On the CBoT the decline is even worse at 0,6%. Corn is also just in the red with a price that is ¼ cent lower. Only soy is in the green at the time of writing, with a plus of 0,8%.
The wet conditions in northwestern Europe are gradually reaching analysts on the other side of the Atlantic. FranceAgriMer announced last Friday that 67% of the planned winter wheat area has been sown in France. For comparison: last year, when a dry autumn cooperated nicely, 91% had already been sown by this time and the five-year average is 83%. The wheat in the ground is also not a certainty. A plot without flooded areas is the rule rather than the exception in large parts of Northwestern Europe. Due to the persistent wet period, the harvest of a relatively late crop such as beets is also delayed, making it difficult to sow winter wheat. All in all, the European wheat area could be smaller than expected more than a month ago.
Delay
In Brazil, the start of the new season is not going as planned. According to market agency Patria Agronegocios, only 61% of the planned soy area has been sown, compared to 73% this period last year. In the south of Brazil it is rain that slows down farmers, while further north drought is a problem. In the important agricultural state of Mato Grosso, soy sowing is almost thirty days behind normal. Later sowing does not have any major negative consequences for the soy yield. Growers do run into problems with successive cultivation of maize, the second crop in one growing season. Sowing corn a month later is detrimental to the yield. About two-thirds of corn production in Brazil comes from maize following soy.
Competitive struggle
China is hunting for wheat on the world market, the USDA confirmed again last Thursday. China has had to write off part of its own wheat harvest due to quality problems. With a mediocre harvest in prospect for Australia in the short term and wheat prices relatively low over the last two years, China continues to buy and the country is on course to become the largest wheat importer. With good demand, China is creating a bottom in the current wheat market, according to some analysts. The child of the bill threatens to become the previously largest wheat importer in the world, Egypt. The economy of the North African country is faltering and having sufficient hard currency is no certainty. In other words: Egypt is struggling to compete with Chinese wheat buyers.