The wheat harvest is largely behind us. Little reason for movement on the market, you might think. Things are different. Wheat is on the rise for days in both Chicago and Paris. Corn and especially soy are under the spell of the weather reports. In the US, these crops could become prematurely ripe due to lack of moisture. Things are really exciting in Brazil, which has had the driest start to the new growing season in over forty years.
The September wheat contract on the Matif closed yesterday €2,75 higher at €206,75 per tonne. The December contract gained €1,25 to €220,50 per tonne. On the CBoT, wheat closed 2,4% higher at $5.65¼ per bushel. Corn rose 1% to $3.90½ per bushel in the last trading session. Soybeans showed a similar movement, closing 0,9% higher at $10.06 per bushel.
The winter wheat harvest in the northern hemisphere is long gone. The threshing of spring wheat in the north of America and Russia has also made great strides. The supply of wheat for which growers have no storage is declining. In combination with a disappointing wheat harvest in the EU, the mood on the wheat market has shifted. On the Matif, the December wheat contract closed positive for the seventh day in a row and on the CBoT this is the sixth consecutive day. According to various analysts, wheat is therefore the driving force behind the recovery on the grain market.
The fact that corn and soybeans are also taking steps up is certainly not only due to the developments in wheat. It is dry in the US and according to the weather reports, there is no rain in the coming seven days in the Midwest. Corn and soybeans are doing well, but could ripen faster due to lack of moisture. Becoming too ripe is at the expense of the yield.
Driest start since 1981
The drought in the Midwest is nothing compared to what is happening in Brazil. The northern half of the country is particularly dry. The Brazilian Meteorological Institute is calling it "the worst drought since 1981." The corn harvest in Brazil is almost over. Farmers are getting ready to plant soybeans. Mid-September is the ideal time for that. The lack of moisture in the soil could force growers to plant later.
AgRural expects the soybean area to reach 46,4 million hectares next season. Although this is 0,9% more than last year, it is the smallest area expansion in eighteen years. This brings the potential harvest to 168 million tonnes. The expectation of market bureau Patria is fairly in line with AgRural. Patria is counting on 46,45 million hectares of soy and a potential harvest of 166,72 million tonnes. It should be noted that these yield forecasts assume an average course of the growing season. Due to the dry start, soybeans are already starting with a disadvantage. Several analysts therefore expect that the forecasts will be adjusted downwards a few more times in the coming period.