The arrival of stable summer weather and even a heat wave in parts of Europe ensures that the combine harvesters can do their work. This gives the market a better indication of the expected harvest volumes and quality. At the same time, dry weather brings new concerns.
In Europe, combine harvesters are still mainly busy harvesting winter barley and a single plot of rapeseed. The harvest is on average a few days earlier than average. Winter wheat is already being threshed in the south of Europe, just like in the far south of Russia. Traditionally this puts some pressure on the wheat market, as was also seen on the Matif. The September contract closed on Thursday, June 27, at €227,25 per tonne. That is €3,75 more than Wednesday's closing price. This means that the price is picking up again.
US wheat harvest to completion
In the US, the combines have been running for over a month now. In the nine largest wheat states, the harvest is between a quarter and 95% complete. The harvest is well advanced, especially in Oklahoma and Arkansas. 85% to 95% is considerably more than the five-year average, which is around 50% for the end of June. The yields and quality are average to good. After more than enough rainfall in the north of the US, spring wheat is also doing better there.
After writing red numbers earlier this week, the CBoT in Chicago was back in the plus for wheat on Thursday. The July contract rose 3,5% to $5,6 a bushel. Corn was $5 lower at $4,15 per bushel and soybeans also finished in the red at $11,52¾.
Further north, in Canada, Bloomberg's own research has estimated a wheat area of approximately 11 million hectares. That is more than 80.000 hectares more than expected in March. The area of rapeseed will remain stable this season at 8,7 million hectares, the news agency believes.
Purchase new harvest
After Egypt earlier this week, more countries have also reported as buyers for wheat. State agency OAIC in Algeria has reportedly purchased between 130.000 and 150.000 tons of milling wheat new crop during a tender round. Prices would have been paid for between $248 and $250 per tonne C&F (delivery August to October). That's more than what Egypt bought from Russia in particular earlier this week ($227 to $230). Jordan also purchased 60.000 tons of milling wheat for $256, while South Korea ordered feed wheat and corn from South America.
Down under in Australia, meteorological stations and the agricultural sector closely monitor the weather. The El Niño weather effect is currently considered neutral. Since December, sea surface temperatures in the Pacific Ocean have been cooling. Climate agency BOM expects this trend to continue in the coming months. A La Niña may form in September, which traditionally delivers more rain on the west coast of the country and drier weather in the east.
Drought is not only positive
The current dry period is good news for Western European countries. There is still sufficient moisture in the soil. However, arable farmers are concerned about how the crops will survive a longer warm period because the root system has developed minimally this year. It can give a final blow to later grain crops, many of which are growing this year.
From East Germany towards the east, Poland and Romania, it is considerably drier. The winter grains there have matured to such an extent that the weather for harvesting is desirable. Farmers fear the impact on corn and sunflowers.