European prices for wheat and corn on the Matif futures market have reached the bottom this week and are bouncing back. The Paris trade fair closed with green numbers on Tuesday. There is also the prospect of a price increase on Wednesday afternoon, July 17. This is not the case in the US.
On Monday, July 15, the September contract for wheat on the Matif closed at €213,50 per tonne. That is the lowest price since May 10. On Tuesday the price improved slightly, with a closing price that was €1,25 higher than the day before. On Wednesday afternoon, the contract is trading $2,25 higher. The other delivery periods are also positive. Various countries purchase considerable volumes and that stimulates the market.
Egypt buys
The Egyptian agency GASC and the Jordanian government launched new tender rounds for the purchase of wheat at the beginning of this week. It is the first purchasing round in less than a month. Egypt reportedly bought 720.000 tons of Russian and 60.000 tons of Bulgarian wheat. A relatively small portion of the Russian product was purchased at a price of $226 per tonne (FOB). That is almost the same as the price of a month ago. The majority of the tons traded in a price range between $228 and $235.
Jordan bought 120.000 tons of wheat in a purchasing round. Algeria and Thailand are now also on the market with their own tender rounds. Russia still has an export gap to make up, according to figures from market agency SovEcon. They estimate Russian grain export figures at 3,4 million tons. That is 1,3 million tons less than in June. Of this, wheat accounts for 2,8 million tons, compared to 4 million tons last month.
summer storm
The wheat price on the CBoT also closed in the red on Tuesday, with a rate of $195,02 per tonne. The market there will also be slightly positive again on Wednesday, just like soybeans. Corn is neutral. In the Corn Belt, damage is being assessed after another summer storm that hit parts of Illinois and Iowa. It is still unclear what impact this will have on the crops.
According to the USDA, 68% of corn and soy are currently in good to excellent condition. That is slightly less than what the trade had taken into account.
German harvest reduced
Now that combine harvesters are doing their work everywhere in Europe, the picture of yield and quality is also becoming clearer. The German Raiffeisenverband DRV has corrected downwards its harvest forecast for grains in the country. Half a million tons of the grain harvest are planed, bringing the total to 41,5 million tons. That is the lowest yield in seven years, since the dramatic year of 2018. Rapeseed is down slightly, to 3,8 million tons.
German arable farmers are plagued by showers to complete the winter barley harvest. Rapeseed is now also being harvested and the first winter wheat plots have been threshed. Changeable weather will continue to affect the grain harvest in the coming period, which will have an impact on most European countries.
Scorching heat costs kilos
This is very different in Eastern Europe. The crops there are suffering from a scorching drought. It has been very dry there for quite some time and moisture reserves in the soil have been depleted. For late crops such as grain maize and sunflowers, this can mean a yield loss of 20% to 50%, depending on the region. That's what local analysts and meteorologists say. In mid-July, the mercury regularly reaches values well above 30 degrees, with peaks of 41 degrees in the south of the country. That is the highest temperature ever measured in Ukraine. According to Agriculture Minister Taras Vysotskiy, a top harvest is no longer possible due to this weather. The NGO Ukrainian Agrarian Council estimates 77 million tons of grains and oilseeds, compared to 82 million tons last year.
In Rostov-on-Don, Russia, near the Ukrainian border in the south, the mercury even reached 50 degrees. The Rostov region accounts for 11% of all grain in the country and heat and drought therefore have an impact on the figures for the whole of Russia. The Ministry of Agriculture itself assumes 132 million tons of grains. That is 9% less than the 145 million harvested last year and 16% less than the 2022 harvest. Arable farmers in Rostov suffered from late frost damage this spring, after which a lack of precipitation and heat are now dealing another blow.