The rally on the wheat market came to a halt yesterday. Whether this is temporary or not is up for debate. Russia could be the deciding factor. The country has assumed the role of price fighter on the grain market. The question is whether Russian exporters will now dare to raise the price a bit.
The September wheat contract on the Matif closed yesterday €3 lower at €203,75 per tonne. The December contract lost €2 to €218,50 per tonne. On the CBoT, wheat fell 0,8% to close at $5.61 per bushel. Corn moved mostly sideways and eventually closed half a cent lower at $3.90 per bushel. In contrast to grains, soybeans did close in the green. Oilseeds showed a modest gain of 0,2% to $10.08¼ per bushel.
It is not surprising that the wheat market paused during the last trading session. If wheat is to take the next step, Russia will also have to join the rally that Europe and North America experienced in the past period. Whether that will happen is another matter. Russia has the role of price fighter and Russian exporters have so far been cautious with price increases. Incidentally, the Kremlin is not always happy with that either in connection with the taxable value. The Russian Ministry of Agriculture has left the forecast for the total grain harvest unchanged at 132 million tonnes.
In France, the wheat harvest is 26% lower than last season. This is according to the growers' association AGPB. The club is counting on a harvest of 25,98 million tonnes this season, compared to 35,08 million tonnes last season. You can guess the reason for the smaller harvest: the extremely wet growing season. From sowing to harvest, it has hardly been dry.
Drought forces different choices
Warm and dry, that is how the summer in Ukraine can be summed up. And for the time being, there does not seem to be any change in that weather pattern. Not bad for threshing corn and sunflowers, but for sowing winter crops, the consistently dry weather is less favourable. According to some local sources, farmers are therefore changing their cropping plan. Rapeseed in particular is losing popularity. Putting rapeseed (which is now being sown) in dry soil without any rain in the forecast is a big gamble. According to sources, the area of rapeseed could fall below 500.000 hectares this season. Compared to last season, more than 200.000 hectares less have been sown so far, according to figures from the Ukrainian Ministry of Agriculture. Up to and including 2 September, 446.000 rapeseed have been sown.
Winter wheat is actually gaining popularity among Ukrainian growers. This area could exceed 5 million hectares this season. By comparison, last season there were 4,7 million hectares of winter wheat. Wheat also needs moisture, of course. The chance of rain later in the autumn is increasing and wheat can be sown later without compromising on the potential yield. Incidentally, a late start of wheat is also a risk for Ukrainian growers due to the chance of wintering.