Analysis Grains & Commodities
Dry start for US winter wheat
It was already known that the wheat yields in the EU are not good. Yesterday, a new estimate was released by the IGC, in which the harvest in the EU has been reduced even further. According to the IGC, the total consumption of grain on a global scale will be higher and will exceed the production in the 2024/25 season. In America, concerns about drought are increasing somewhat. In the winter wheat regions of the US, the start of the 2025 harvest is a lot drier than last year. Further south, in Argentina, a lack of water is causing problems with exports.
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Choose the subscription that suits youThe December wheat contract on the Matif closed yesterday down €2,75 to €215,75 per tonne. On the CBoT, grain prices also closed in the red last trading session. Wheat closed down 1,8% to $5.65½ per bushel. Corn showed a similar movement, closing down 1,7% to $4.05¾ per bushel. Soybeans showed little movement in price. The November contract closed down three-quarters of a cent to $10.13¾ per bushel.
The International Grains Council (IGC) released a new market report yesterday. Global wheat production has been reduced by 1 million tonnes to 798 million tonnes for the 2024/25 season. A season earlier, 795 million tonnes of wheat were harvested. For the EU, the IGC has reduced the yield compared to the forecast a month ago by 2,4 million to 122,4 million tonnes. For comparison: in 2023/24, the EU threshed 133,1 million tonnes of wheat according to the IGC. The forecast for the Australian wheat harvest has been increased by 1,7 million tonnes to 31,8 million tonnes. Wheat consumption for the 2024/25 season has been kept the same as last month at 803 million tonnes.
The total grain harvest is estimated by the IGC at 2.315 million tons. This is a record harvest and equal to the forecast of August. The consumption of grain has increased slightly compared to the previous forecast, by 5 million tons to 2.326 million tons. The IGC has no changes for soybeans. Production is estimated at 419 million tons and consumption at 406 million tons.
Drought is back again
In the heart of the American wheat belt, it is dry. The new drought monitor shows that 58% of the winter wheat in the US is in an area with a shortage of precipitation. This means that the start of the new season is a lot drier than a year ago, when 47% of the area was in a drought zone. For corn and soybeans, the conditions in terms of drought are a lot more favorable. 26% of the corn and 33% of the soybeans are in a drought zone, compared to 58% and 53% at this time last year. Compared to last week, it has become a lot drier in the American corn belt.
Argentina is also dry. Just as the low water level in the Mississippi is causing problems in the US, Argentina is struggling with a similar problem in the Parana River. The water level in the Parana is the second lowest since 1970. Approximately 80% of Argentine grain exports go via this river. A major difference with, for example, the Mississippi or the Rhine in Europe is that the main seaport is not at the mouth of the river. The large seagoing vessels have to sail approximately 250 kilometres up the Parana before they reach the port of Rosario, the centre for grain transhipment in Argentina. Due to the low water level, these vessels cannot be fully loaded at the moment. This makes transport from Argentina a relatively expensive affair.