After the sharp fall at the end of last week, grain prices recovered somewhat last trading session. The supply of relatively cheap wheat from Russia remains like a millstone around the neck of the European and American markets. Drought has cost Australian crop farmers yields, Abares figures show. The institute expects better yields for the coming cultivation.
The March wheat contract on the Maitf closed yesterday €6 higher at €188,75 per tonne. The most traded May contract closed €1,75 higher at €193,25 per tonne. Grains were also on the rise at the CBoT. Wheat rose 0,6% on the CBoT to $563½ per bushel. Corn closed 1,3% higher at $4,17½ a bushel. Soybean moved more sideways, holding up a modest 0,3% to $11.47 per bushel.
Wheat prices in Russia remain under pressure. Market agency Ikar lowered the price for Black Sea wheat by $12 to $203 per tonne. The lower price has limited effect on Russian grain exports. According to SovEcon, Russia exported 1,12 million tons of grain last week compared to 1,03 million tons a week earlier. Of this, 910.000 tons was wheat last week compared to 870.000 tons a week earlier.
War premium from insurers
Transport across the Red Sea remains an additional concern for grain exporters from Europe and the Black Sea region to Asia. Reuters reports that rates for insuring ships for the approximately seven-day voyage through the Red Sea will remain stable this week. The additional war premium that insurers charge Lloyd's of London on the Red Sea is 1% of the ship's value, up from 0,5% before the Houthis' attacks began, according to Reuters sources. In dollars, this amounts to tons of extra that insurers charge per ship.
In Australia, 2023 million tonnes of wheat were harvested in the 24/26 season, according to Abares, the statistics office of the Australian Department of Agriculture. The harvest is therefore 500.000 tons higher than in the previous forecast, but compared to the previous season, 36% less wheat was harvested. The wheat yield in the harvest that has just been completed is around the ten-year average.
Outlook is more positive
A relatively dry growing season, partly caused by the El Niño weather phenomenon, cost wheat yields last crop year, according to Abares. For the 2024/25 season, Abares estimates the wheat harvest at 28,4 million tons. The total harvest of winter crops is 9% higher at 51 million tons. El Niño is losing strength and in recent months the summer rains have replenished moisture reserves, according to the institute. Several weather models indicate that we could be heading into a La Niña later this year. This generally brings favorable weather for Australian agriculture. Winter crops are only sown in Australia in April. Some analysts point out that the forecast for the 2024/25 season is not yet perfect.
Corn and soy received a boost last trading session from international demand. Taiwan bought 110.000 tons of corn from the US, the USDA reports. Furthermore, the ministry reported the sale of 126.000 tons of soy meal to an unknown destination. Both not shocking amounts, but enough to suppress the bearish undertone that is still in the market.