Cereal quotations have started on a negative note in the first trading session of 2024. Wheat on the CBoT in particular stands out in that respect. The tense geopolitical situation on the Black and Red Seas has again been pushed into the background. The weather in South America seems to be becoming more favorable for arable farmers there, provided the predictions come true, of course.
The March wheat contract on the Matif closed €1,50 lower yesterday at €221 per tonne. On the CBoT, wheat took a big step back to close 3,4% lower at $6.06¾ per bushel. Corn fell 1,6% to $4.63¾ per bushel. Soybean also closed in the red, losing 1,5% to close at $12.74 per bushel.
Improved weather conditions in South America pushed grain prices down. Heavy showers are forecast for the dry parts of Brazil in the coming days. The south of Brazil and Argentina have a good mix of sun and rain in the weather reports. The big question is whether this will be done in time to save the Brazilian soy harvest. Various local sources estimate the soy harvest at 151 to 153 million tons. The USDA expected 161 million tons in the latest forecast.
early harvest
It was feared that due to an average late sowing date and a moderate start of soy, the area of maize, which is sown as a successive crop, would be lower. That could be a long way off. About 80% of the planned soybean area in Mato Grosso state was in the ground at the beginning of November (the optimal time), according to the state's agricultural economics institute. That was more than 90% a year earlier. However, soy that is sown on time ripens faster due to the drought, which means that the subsequent crop of maize can be sown relatively early. Corn sown early is generally beneficial for yield. However, the late sown soy will not be harvested in time to sow corn afterwards. Some growers are considering sowing less corn from a cost perspective. Soy yields are generally disappointing and growers must have the cash to purchase fertilizer and starting material for the relatively expensive corn cultivation.
Moderate wheat exports
There is not enough bullish news in the wheat market to keep the price going. The geopolitical situation remains tense with Russian attacks on Ukraine's Black Sea ports and unrest in the Red Sea. The US exported 28 tonnes of wheat in the week ending December 273.000. A total of 9,6 million tons of wheat was exported by the US. That is 19% less than last year. Of the exports forecast by the USDA for the 2023/24 season, 49% have been exported. The five-year average for this period is 55% of forecast seasonal exports.