From drought and frost in Russia, the focus on the wheat market is now shifting to the prairies in the US. There is the potential for good yields in winter wheat, as shown by the first results of the Crop Tour. Conab came from Brazil with new yield expectations. Soy in particular stands out; the severe weather and flooding in Rio Grande do Sol are not reflected in these figures.
The September wheat contract on the Matif took a step back yesterday to close €9 lower at €249,75 per tonne. There was also a correction on the CBot after the significant increase. The July wheat contract fell 2,1% to $6.72½ per bushel. Corn lost 1% to $4.67½ per bushel. As is almost usual, soya has been the most stable factor in recent days and lost 0,4%. That brought the closing price to $12.14½ per bushel.
The weather is and remains the seasoning, especially in the wheat market. From the problems of drought and frost in Russia, the attention of market players has shifted to wheat in the US. The USDA already provided an impetus for this earlier this week with the Crop Progress report. Half of the winter wheat in the US is in good or excellent condition. That is the same as last week and the best reading since 2020. Some weather models predict rain for the southwestern part of the prairies. Although it is not a certainty that this rain will fall, it is a dampening factor on the wheat market.
The Kansas Wheat Quality Tour kicked off this week. For mid-northern Kansas, the yield potential is good, according to the first results of the tour. Due to rain in Oklahoma and southern Kansas, analysts expect that there is also the potential for good yields there.
Forgot about Brazil's floods?
Conab yesterday released new revenue expectations for Brazil. The figures from the agency that falls under the Brazilian Ministry of Agriculture were surprising. Expected soy production is 147,7 million tons compared to 146,2 million tons in last month's forecast. That is well below the 154 million tons that the USDA expects. The surprise is that the flooding in the southern province of Rio Grande do Sol does not seem to have been taken into account. Conab keeps the yield the same at 21,4 million tons. Several private market agencies and analysts have forecasts for Rio Grande do Sol at or below 20 million tons.
Brazil's corn harvest is estimated at 111,6 million tons by Conab. That is 700.000 tons more than in the previous forecast. This higher yield is mainly due to better expectations for the second maize crop, the safrina crop. The yield of successive maize cultivation is now estimated at 86,2 million tons. The expected yield for wheat has been adjusted downwards by Conab to 9 million tons. That is 7% less than the previous forecast. This is mainly due to a smaller area, probably due to the floods in Rio Grande do Sol.
Tap for soy
In the US, the soy sector is not happy with Biden's decision to... used cooking oil (used frying fat) from China from the list of products for which a higher import tariff applies. Used cooking oil is a substitute for soybean oil for the production of biodiesel. Analysts consider the fact that the Biden administration is not increasing the import tariff on used cooking oil bearish signal for soy.