At the tail end of the grain season, the demand for wheat increases somewhat. Algeria and Egypt closed two tenders yesterday of 800.000 and 470.000 tons respectively. Europe is also participating in this. StoneX expects less corn to be harvested in Brazil. Due to drought, yields in large cultivation areas are disappointing.
There was not much movement in wheat on the Matif last trading session. The September contract closed €0,25 lower at €258,50 per tonne. There was more action on the CBoT. Wheat in Chicago lost 2,2% to $6.58¼ per bushel. Corn and soy moved more sideways. Soy closed 0,2% lower at $4.42½ per bushel. Soy lost 0,5% to $11.79 per bushel.
The relatively early start of the wheat harvest in the US was still quite haunting in Chicago yesterday. The Crop Progress report from earlier this week showed that 6% of winter wheat has been harvested compared to 3% in the five-year average. In addition, both summer and winter wheat are doing relatively well in the US.
The EU squeezes in
The EU has exported 2 million tons of wheat through June 28,17. Last season that was 29,56 million tons. Exports are therefore lagging behind by approximately 5%. There is a demand for wheat from North Africa, and the Black Sea region does not have the exclusive right there. Egyptian state buyer Gasc bought 470.000 tons of wheat in a tender. Most of this comes from the EU. Romania supplies 180.000 tons, France and Ukraine both 120.000 tons and Bulgaria 50.000 tons. Prices in Gasc's tender range from $269 to $284 per tonne FOB (delivered to the vessel). Algeria has purchased 800.000 tons of wheat in a tender. According to various sources, this order would largely be filled with wheat from the Black Sea region. The price would be around $280 per tonne C&F (free). Jordan did not purchase in a tender of 120.000 tons that the country had open. Jordan reportedly considers the prices too high.
Drought costs tons of money in Brazil
StoneX has adjusted the yield forecast for the subsequent crop of maize after soy downwards by 3,9% compared to the May forecast. The market agency now estimates the harvest at 93,5 million tons. Due to drought in the provinces of Mato Grosso do Sul, Parana and Sao Paulo, corn yields are lower than expected. According to StoneX, the yield in some cases falls below 5 tons per hectare. The average yield of maize succession is estimated at 5,42 tonnes per hectare compared to 5,67 tonnes per hectare in the May forecast. About 75% of Brazil's corn harvest comes from the second crop. Total corn harvest has been cut by StoneX from 125,6 million tons in May to 121,75 tons in the June forecast.
Argentina's grain exports plummeted in May. Last month the export value was $2,6 billion. That is 37% less than in May 2023, according to the Argentine grain exporters association CIARA-CEC. New trade and monetary policy, the influence of the weather and a later harvest mean that the union has exported less. In addition, grain exporters and processors of oilseeds are struggling with low capacity utilization and therefore negative margins. Strikes by dock workers, among others, exacerbate that problem, the union adds.