The 2024 harvest has not even been completed yet and speculation about the 2025 harvest is already rife. The start of winter wheat in Russia and the US is not ideal. Rain is more than welcome in the major wheat regions in both countries. In South America, the weather forecasts are shaping the mood in corn and soy.
The December wheat contract on the Matif closed yesterday €1,50 higher at €227,75 per tonne. On the Chicago exchange, grains closed in the green. Wheat gained 0,9% to $5.85 per bushel. Corn made a similar move, also up 0,9% and closed at $4.04¾ per bushel. Soybeans took a step back in the last trading session and closed 1,1% lower at $9.80 per bushel.
Drought continues to be a topic of conversation in the grain trade. In the south of Russia, it is too dry for winter wheat. In the Rostov region, 12% of the average amount of rain has fallen since September 6. Rain is forecast for the area in the coming days. According to local sources, this is badly needed. The optimal sowing date for winter wheat is September, but farmers have waited because of the drought. If they sow much later, the wheat may not be sufficiently developed when frost sets in. Lack of moisture is not only an issue in the Rostov province. According to Commodity Weather Group, 40% of Russia is suffering from drought stress after the rain that is forecast for the coming days.
Drought has no effect on yield potential
Market bureau LSEG has kept the yield forecast for the upcoming wheat harvest in the US unchanged at 36,4 million. The sowing of winter wheat is running nicely in line with the multi-year average and rain is forecast for the southern prairies in the coming days. Rain is also badly needed according to various sources. Some plots have been sown, but the seed is dry.
According to some analysts, the fact that the grain market is not falling any further despite the lack of bullish news is due to the relatively small wheat stocks due to moderate harvests in Europe and the Black Sea region. The room to go down is therefore limited. This does not mean that we have now reached the bottom.
Certainly for the uncertain
Rain is in the weather forecast for South America. The sowing of soybeans is lagging behind in Brazil due to the dry period. Corn and wheat in Brazil and Argentina are also in dire need of rain. Growing conditions seem to be improving, but the accumulated deficit is not easily caught up. According to some analysts, the fact that there are doubts about the yield potential of the crops in Argentina and Brazil is underlined by Mexico. The USDA data shows that Mexican buyers have secured 1,6 million tons of corn in the US. You could say that Mexico is playing it safe.