The JRC confirmed in the March edition of the Mars bulletin that winter grains in Europe did not emerge from the winter unscathed. That is no surprise but a confirmation of what was already going around. In the US, winter wheat in the largest wheat state, Kansas, declined last week. Due to an ample supply of grain from the Black Sea region, the reports had little impact on the futures markets.
The May wheat contract on the Matif closed €3,50 lower yesterday at €201 per tonne. Prices on the CBoT also took a step back. Wheat lost 2,1% to $5.43½ per bushel. Corn fell 1,2% to $4.32½ per bushel. Soy did not escape, closing 0,8% lower at $11.99 per bushel.
The winter grains have not emerged unscathed from the wet autumn and winter, reports the JRC, the scientific agency of the European Commission, in the March edition of the Mars bulletin. "In large parts of Western, Northern and Eastern Europe, extremely wet conditions have had a negative effect on sowing, emergence and initial development of winter crops," the JRC writes. In the north and east there is also damage due to the severe frost in December and January. Because it remains wet, the spring work is accompanied by obstacles, according to the JRC. It means stealing between showers to spread fertilizer, spray and sow summer grain. The latter is especially a problem in the west. The optimal time for sowing spring wheat has already passed. In Romania and Bulgaria it was not too wet but too dry for the development of the crops. According to the JRC, rapeseed in particular will no longer fully recover from the lack of moisture.
Positive yield forecast
Despite the moderate growing conditions, the JRC is reasonably positive in its yield forecast. The average wheat yield is estimated at 5,7 tonnes per hectare compared to 5,65 tonnes in the five-year average and 5,6 tonnes last season. For winter barley, the JRC expects 5,95 tonnes per hectare in the coming harvest. The five-year average is 5,91 tons. An above-average harvest is also forecast for oilseed rape with 3,25 tonnes per hectare compared to 3,18 tonnes per hectare in the five-year average. The JRC's yield forecast is made based on satellite images. It is striking that despite all the problems listed by the JRC, the model produces slightly above-average returns.
In the US, the USDA provided figures on the condition of winter wheat in seven states where cultivation is extensive. In Oklahoma and Texas, winter wheat conditions have improved considerably. In Oklahoma, 70% of the acreage is rated good or excellent compared to 61% last week and in Texas it is 51% good/excellent compared to 46% last week. In the largest winter wheat state, Kansas, the crop has declined. 53% now receive a good or excellent rating compared to 55% last week. In Kansas there are also concerns about late frost. The first wheat plots are starting to stretch there and during that period the crop cannot use frost. The first knot is loose on approximately 7% of the winter wheat plots, so the extent of the possible damage should not be exaggerated, according to analysts.
Price fighters
Ample supply of grain from the Black Sea region dampened the mood among traders despite the bullish tone from both the JRC and the USDA. The Kremlin may be at loggerheads with the Russian exporter TD Rif and is blocking the export of approximately 400.000 tons of wheat, but the good harvest means that more than enough wheat remains available, according to experts. Russia offers wheat at very competitive prices. Ukraine plays a similar role, but in corn. Last season the EU imported much more corn from Ukraine. This is a lot less in the current season, which means that Ukraine has a relatively large stock. That stock is being put on sale, according to analysts. Exporters from the US in particular seem to be having difficulty finding an answer to this.