There are still pluses and minuses on the futures markets. Last trading session was once again one of the negatives. A possible boost for the European wheat market is problems with drought in Morocco. The Chinese Ministry of Agriculture released yield figures yesterday and according to the Minister of Agriculture, we should have no doubts about their accuracy and reliability. In Brazil there is no euphoria among farmers and the number of bankruptcies of agricultural companies is increasing. The director of Cargill Brazil raised the alarm about this.
The March wheat contract on the Matif closed €5,25 lower at €183,50 per tonne. The May contract closed €3 lower at €190,25 per tonne. In Chicago, grains closed in the red. Wheat took the biggest hit, closing 3% lower at $5.45¾ per bushel. Corn lost 1% to $4.13½ per bushel. In soy, the loss was limited to 0,5%, bringing the closing price to $11.40¾ per bushel.
The EU has exported 28 million tons of wheat this season until February 21. Last year this period, exports amounted to 21,4 million tons. Wheat exports are still lagging behind, but they are catching up little by little. Morocco is the largest foreign buyer of European wheat with 3 million tons. According to Moroccan sources, the country will have to increase wheat imports in the near future.
Due to drought, the government's expected 4 million tons of wheat that Morocco expected to harvest is lower, according to Rachid Benali, the leader of agricultural interest group Comader. "We will have to import more. We have no choice." According to Benali, drought problems not only affect wheat but also other grains and sugar. The amount of water in the form of rain and snow has fallen almost every year in recent decades while the population has almost doubled, Benali said. With water reservoirs running low, Moroccan authorities have imposed irrigation restrictions on farmers and are stepping up measures against salinization.
Chinese grain production breaks record
China will have produced a record 2023 million tons of grain in 695,4. The Chinese news agency Xinhua writes this after a press conference by Chinese Minister of Agriculture Tang Renjian. According to him, it is the ninth year in a row that the Chinese grain harvest has exceeded 650 million tons. Food security is and remains an important issue for the Chinese government. China wants to free up more resources to develop highly productive arable land and restore saline and neglected land. The Chinese government also wants to take measures to increase the percentage of organic matter in the soil and invest in irrigation options.
China is the largest importer of wheat, corn and soy. Food consumption in the country has increased in recent years, while the amount of agricultural land has not increased significantly. By protecting agricultural land and increasing yields, China wants to reduce the gap between supply and demand of agricultural products. Increased geopolitical tensions and extreme weather have made the Chinese government's priority to boost agricultural production even greater.
The figures from the Chinese Ministry of Agriculture are accurate and reliable according to Tang. The minister said this when asked that questions had arisen from the annual meeting of parliament about the production figures. The annual yield figures are reasonably stable despite weather extremes last year. Consider, for example, the major floods in eastern China.
Crisis in Brazilian agriculture
In Brazil, 48% of the soy has been harvested according to Agrural. That was 40% last week and last year this week 43% of the soy was threshed. The second crop of maize is 86% sown compared to 70% this time last year. The first crop of maize is 42% harvested compared to 33% last season and 38% at the five-year average this week.
There is no hosanna mood in Brazilian agriculture due to the relatively low grain prices. In fact, Cargill Brazil CEO Paulo Sousa warns of a wave of bankruptcy among agricultural companies in Brazil. Sousa spoke at a conference in Sao Paulo of a financial services provider about the opportunities and challenges for companies in the agricultural sector in Brazil, the country that is the largest exporter of soy and sugar. “There is a wave of bankruptcy filings, a legal novelty that is causing a lot of concern for the sector,” Sousa said. Brazilian traders are increasingly vocal about this problem. The increase in the number of bankruptcies among farmers is jeopardizing deliveries of grain that had already been promised. Exporters may therefore not be able to fulfill their agreements, the grain trade interest group Anec reported last month.