Weather reports and harvest forecasts dominated the grain market last trading session. It remains wet almost continuously in our region. It's not just farmers who are worried about this. Ukraine expects significantly lower grain yields in the coming harvest. In Brazil, soy yields are disappointing, according to Safras & Mercado. The agency made a larger adjustment to the harvest forecast than the market assumed.
The May wheat contract on the Matif closed yesterday €1,75 lower at €195 per tonne. In Chicago there was little movement in the grain market. The May wheat contract on the CBoT closed a quarter higher at $5.47½ per bushel. Corn was unchanged at $4.41¾ per bushel. There was more action in soy, which recorded a plus of 1,4%. This brought the May contract to $11.96 per bushel.
The Ukrainian grain union UGA writes that Ukraine can potentially thresh 2024 million tons of grain and oilseeds in 76,1. This is significantly less than the 2023 harvest, when 82,6 million tons were harvested. The forecast assumes an average course of the growing season, the UGA writes in the explanatory notes. UGA cites a shrinkage of the area due to low grain prices on the world market and relatively expensive transport from Ukraine as the reason for the smaller appearance.
Poor market conditions
The Ukrainian wheat harvest is estimated at 20 million tons for the coming harvest compared to 22 million tons in 2023. If this is achieved, this would be the smallest wheat harvest in twelve years. Due to the smaller harvest, less wheat will be available for export before 2024/25. UGA estimates exports for next season at 13 million. In the current season, the association expects 16 million tons of wheat to be exported. UGA also expects a contraction in corn. The harvest is now estimated at 26,3 million tons compared to 29,3 million tons last season. "Expectations for the new season's corn harvest are deteriorating due to a possible shrinkage in the corn area. Agricultural companies are suffering losses due to too low prices caused by a downward price development on the world market," writes UGA.
About the only crop that shows growth is soy. Due to relatively high prices, the forecast puts the yield at 5,5 million tons for the coming harvest. That was 4,9 million tons last season. The production of rapeseed and sunflowers in the coming harvest is comparable to 2023. For sunflowers, the harvest is estimated at 13,6 million tons against 13,5 million tons in 2023 and for rapeseed at 4,2 million tons in the coming harvest, compared to 4,3. XNUMX million tons last harvest.
The weather reports for Europe reinforce the undertone that prevailed yesterday among players in the grain market and somewhat bullish used to be. It is relatively mild or even warm for this time of year, which benefits the development of the winter grains. It only remains wet in the northwest of Europe. Some of the winter wheat has already not been sown due to persistent wet conditions last fall and now the same thing threatens to happen to the summer grains.
Brazilian soy is disappointing
Soya received a boost yesterday due to a new yield forecast from Conab for Brazil. Due to dry conditions, the agency has adjusted the yield downwards more than analysts expected. Conab reduced the soy harvest by 2,5 million tons to 146,9 million tons. Last Friday, the USDA assumed a Brazilian harvest of 155 million tons. Conab expects an average yield of 3,25 tons per hectare. That was 3,31 tons per hectare last month and 3,40 tons per hectare was threshed last season.
Brazilian soy growers have sold 54,4 million tons of soy from the current harvest to processors and exporters, according to Safras & Mercado. “Farmer sales continue as producers need cash despite falling grain prices,” Luiz Fernando Roque, a soy analyst at Safras, told Reuters. "Sometimes, when the market stops falling, farmers' sales increase, but of course the sales pace remains below average." Roque expects that farmers will hold on to soy for as long as possible until prices improve significantly. In the five-year average, growers have around sold about half of their soya this time, which is now more than a third.