The Black Sea region remains the driving force in the wheat market. Ikar yesterday released a new harvest forecast for wheat in Russia. The Chicago stock exchange appeared to be particularly sensitive to this. Quite remarkable because the winter wheat in America is not in bad shape. Is that a sign that there is more to come?
The September wheat contract on the Matif closed €0,50 higher yesterday at €257 per tonne. On the CBoT, wheat rose 1,3% to $6.97½ per bushel. Corn and soy took a step back last trading session. Corn closed 0,5% lower at $4.58 per bushel and soy lost 0,9% to $12.36¼ per bushel.
Less favorable weather reports for grain growers in the Black Sea region are an important reason for the price increase, especially on the American wheat market. After the frost damage earlier this month, there is now a drought that is worrying market players. Market agency Ikar reduced the wheat yield in Russia by 2,5 million tons to 83,5 million tons in the new forecast. Ikar expects Russia to export 2024 million tons of wheat in the 25/45 season. That was 47 million tons in the previous forecast.
Is the way up clear?
The fact that the American wheat trade in particular is reacting quite strongly to reports from Russia is a sign according to some analysts. With 49% of US winter wheat ranking as good or excellent in the latest Crop Progress report - the best reading since 2020 - and good yield potential in the Kansas Wheat Tour, the starting position for US wheat is not bad at all . Some analysts expect that these price-pressure developments have little effect on the market, paving the way for further increases on the CBoT.
Jordan had an open tender for 120.000 tons of milling wheat. However, the country has not responded to the registrations. Sources report that Jordan thinks the prices are too high. Tunisia has opened a tender for 100.000 tons of wheat for delivery in June. Analysts are curious whether the country will follow Jordan's example.
Severe weather
Corn and soy were under some pressure due to US planting progress in the Crop Progress report. Few analysts are convinced that American arable farmers will achieve the corn acreage they had planned. About 30% of the corn still needs to be sown. However, there is severe weather in part of the cornbelt. Tornadoes wreaked havoc in Iowa last day and more rain is forecast. The seeders will probably have to stay indoors until early next week. After that it will be too late to sow corn.
In Rio Grande do Sul, the southern province of Brazil, they are still assessing the damage after the floods. Nearly 13.000 pigs and 330.000 poultry have drowned, grain and soy have been lost and logistics chains have been seriously disrupted. If that isn't enough, rain is coming again. Local sources warn of new flooding in the area and fear more damage.