In Russia and Ukraine, winter wheat sowing is delayed due to drought. Russia has the slowest start to the sowing campaign in eleven years. China has announced the intervention prices for wheat for the domestic market. In contrast to the movement on the free market, the intervention price for Chinese wheat growers has been raised slightly. In the US, a group of Republicans and Democrats want to stimulate domestic production of biofuels.
The December wheat contract on the Matif closed yesterday €1,75 higher at €220,50 per tonne. The CBoT also closed in the green across the board last trading session. The biggest gainer was wheat, which rose 1,9% to $5.89¼ per bushel. Corn closed 0,9% higher at $4.15¼ per bushel. Soybeans were among the grains in terms of gains, closing 1,1% higher at $10.53¼ per bushel.
Drought in the Black Sea region gave wheat in particular a boost. According to SovEcon, 8,3 million hectares of winter crops have been sown in Russia. That is 1 million hectares less than a year ago, the slowest sowing campaign in eleven years so far. Due to drought in the south of Russia, growers there are slowing down the sowing of winter wheat and rapeseed, among other things, according to the market bureau. In Ukraine, the sowing of winter wheat is also lagging behind last season. According to the Ukrainian Ministry of Agriculture, almost 880.000 hectares have now been sown, compared to 1 million hectares this time last year. As in Russia, a lack of moisture in the soil is also causing the delay.
Estimates of the upcoming wheat harvest in Argentina vary widely. Market bureau LSEG came up with an estimate of 17,2 million tons yesterday. The Buenos Aires grain exchange came up with a more optimistic estimate of 18,6 million tons a little later. The USDA was somewhere in between earlier this month with a yield forecast of 18 million tons of wheat for Argentina.
Intervention
The Chinese Central Planning Bureau has announced the intervention prices for wheat in 2025 and 2026. The minimum price will be 119 yuan per 50 kilos, which is approximately €304 per ton. In 2024, the intervention price was 118 yuan per 50 kilos, or approximately €302 per ton. In 2025 and 2026, the Central Planning Bureau wants to buy a maximum of 37 million tons of wheat. That is comparable to this year. If the wheat price on the free market falls below the intervention price, the Chinese government will buy wheat directly from growers for the minimum price.
In the US, a group of Republicans and Democrats have introduced a bill to encourage the use of American feedstocks in biofuels. The bill, aptly named the Farmer First Fuel Incentives Act, would provide a tax credit for biofuels made from locally produced feedstocks. If the bill passes, canola from Canada or imported 'used cooking oils' would be excluded from the tax breaks.