Grains were on the rise last trading session. Wheat in southwestern Russia was already suffering from drought and now there is a threat of frost. In the US, rain in the corn belt is delaying sowing of corn and soy. Further south in Brazil, everything has been disrupted by floods. Crops still in the field have suffered heavy damage, but the chain around them has also been disrupted. From livestock farmers who no longer receive feed to slaughterhouses that come to a standstill because cattle can no longer be supplied.
The May wheat contract on the Matif rose yesterday by €5,50 to €215,25 per tonne. The September contract closed at €245,25 per tonne. On the CBoT, wheat rose 4,3% to $6.32¼ per bushel. Corn and soy were also on the rise. Corn rose 2,2% to $4.57 per bushel. Soy rose slightly more by 2,7%, closing at $12.34¾ per bushel.
The weather is the driving force behind the rally in the grain market last trading session. It is dry in southwestern Russia. As if that weren't enough, moderate frost is forecast for this part of Russia and eastern Ukraine before the end of this week. According to experts, this could cause significant damage to growing grain crops.
The price for Black Sea wheat is on the rise. Ikar is trading $4 higher this week at $216 per tonne for Russian wheat delivered to Black Sea ports. Russian wheat exports took a step back last week. SovEcon writes that 770.000 tons of grain were exported last week compared to 990.000 tons a week earlier. Of the grain exports last week, 670.000 tons were wheat.
Corn sowing slows down due to rain
Rain on the US cornbelt hampered corn planting last week, according to the USDA's new Crop Progress report. Of the planned area, 36% is in the ground. This week last year, 42% was in the ground and the five-year average is 39%. Of the maize that has been sown, 12% is at the top compared to 9% in the five-year average. The rate of soy sowing is also decreasing somewhat. A quarter of the soy has been sown compared to 30% last year this week.
The condition of winter wheat has improved slightly this week with 50% rating good or excellent compared to 49% last week. Last year this week, only 29% of the winter wheat acreage in the US was in good or excellent condition. 43% of winter wheat is on the ear compared to 32% in the five-year average. Wheat is most developed in Arkansas and North Carolina, with 81% on the ear in both states.
Sowing spring wheat is ahead of schedule. In the six largest spring wheat states, 47% has been sown. Last year this week it was 21% and the five-year average is 31%. 47% of the planned area of spring barley has also been sown. The five-year average for this week is 44%.
Disruptive floods
Players in the soy market are mainly concerned with the consequences of the floods in the south of Brazil. The province of Rio Grande do Sul is the second largest soy producer in the country and approximately a quarter of the soy still needs to be threshed. Before the floods, the province's soy harvest was estimated at around 22 million tons. According to local sources, 2 to 3 million tons of this has been lost. Of the 30% to 40% that still need to be harvested, an average of 70% to 80% is damaged, especially on the lower plots.
In addition to the damage to crops, transport has also largely come to a standstill in the region. This does not only affect arable farmers. Twelve chicken slaughterhouses are partially closed and five pig slaughterhouses receive no or insufficient pigs. In the meantime, livestock farmers are depleting their feed supply, local trade associations warn.