Analysis Grains & Commodities
Wheat growers in the US are preparing for extreme cold
Wheat was under some pressure in both Paris and Chicago last trading session. The market did not receive much support from the latest weather reports, which are not favorable for grain growers in the northern US. Furthermore, the forecasts concern analysts. The International Grains Council released its wheat harvest forecast yesterday and the Wasde report is due this evening.
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Choose the subscription that suits youThe March wheat contract on the Matif closed yesterday €3,25 lower at €218,25 per tonne. Wheat was also down on the CBoT. The March contract closed 1,1% lower at $6.03¾ per bushel. Corn and soy moved sideways. Corn closed down 0,3%, bringing the closing price to $4.57¾. The March soy contract on the CBoT closed unchanged at $12.36½ per bushel.
The International Grains Council (IGC) has revised up world wheat production to 2023 million tonnes in the 24/788 season. That is 1 million tons more than in the previous forecast from December. Last season, 804 tons of wheat were harvested. Wheat consumption this season is estimated at 804 million tons, equal to the IGC's December estimate. According to the IGC, the estimated ending wheat stock is 266 million tons, 2 tons more than in the previous forecast.
Extreme cold
In the US it is again subject to discussion in the grain trade. Very low temperatures are forecast across much of the US this weekend and early next week. Snow is also expected in the Corn Belt and southern prairies. This is difficult for fattening farmers who have to feed the cows and for traffic, for example, but for winter wheat a protective snow blanket is essential against the extreme cold that is predicted. There is no snow on the northern prairies and some wheat could freeze out if the temperature map below is correct (the temperature is in Fahrenheit, 0°F is approximately -18°C). Due to the generally limited snowfall and high chance of low temperatures, less winter wheat is sown in the northern prairies than further south.
For corn and soy, analysts find it difficult to estimate what the USDA will come up with in the January edition of the Wasde report, which will be released tonight Dutch time. Especially when it comes to South America, we are groping in the dark. Various market agencies have made significant cuts in the forecast soy yield in recent weeks. It is expected that the USDA will also do this, but how large that adjustment will be is a big surprise.