A large order for wheat from Algeria and increasing drought in the US did not improve the mood on the wheat market. In fact, the market took a step back in both Paris and Chicago. The European Commission provided an update on the wheat balances yesterday. Rabobank predicts a top harvest for soy in Brazil. The late start of the growing season does not have to be bad for the yield, according to the bank.
The December wheat contract on the Matif closed yesterday €1,25 lower at €218 per bushel. On the CBoT, wheat closed 0,5% lower at $5.70½ per bushel. Corn also closed somewhat lower, but the loss was limited to 0,2%. There, the December corn contract on the CBoT closed at $4.10¾ per bushel. Soybeans, in contrast to grains, took a step up and closed 0,6% higher at $9.82½ per bushel.
Algeria has secured 480.000 to 500.000 tons of wheat in the tender that closed yesterday, according to various sources. The price is averaging around $263 per ton C&F (freight). Most of the wheat comes from the Black Sea region, but not from the countries that are most active. The bulk is said to come from Bulgaria and Romania.
Soft price floor
Russia is becoming less certain about its self-imposed minimum prices. According to sources, Russian exporters are at $230 to $235 per tonne for wheat FOB (ship delivered) this week. Last week, the Ikar quotation was still at $237 per tonne and the price floor for October is set at $240 per tonne by the exporters and the Russian Ministry of Agriculture.
The European Commission yesterday lowered the wheat harvest forecast by 2 million tonnes to 112,6 million tonnes. Expected exports for the 2024/25 season have been reduced by 1 million tonnes to 25 million tonnes. The EU has exported over 7 million tonnes of wheat so far. The EU's final wheat stock has been reduced by 1,3 million tonnes to 10,4 million tonnes.
In the US, the drought in the wheat regions is again expanding. 62% of the winter wheat is now in an area that is dealing with drought. The most important winter wheat states Kansas, Oklahoma and Texas are largely colored in on the new drought monitor. The rain of last weekend has brought little relief.
Top harvest of soy
Rabobank expects the area of soybeans in Brazil to grow by 2024% to 25 million hectares in 1,5/47. Earlier this month, the Brazilian government service Conab predicted an area growth of 2,8% to 47,3 million hectares. The Chinese state-owned company Cofco is counting on an area of a meagre 47 million hectares. An increase in the Brazilian soybean area is therefore very likely. The expansion in the area is however slower than we have been used to in recent years. Conab is talking about the smallest expansion in six years.
Sowing soy in Brazil is proceeding at a slower pace due to precipitation. According to Rabobank, this will not affect the final yield. Analysts at the bank are counting on a record harvest of 167 million tons of soy. What is more remarkable is that Rabobank estimates the corn harvest to be 3 million higher than last season at 125 million tons. The vast majority of corn in Brazil is grown as a follow-up crop after soy. Sowing soy later means that the corn can only be planted later, and sowing corn later does affect the yields.
Although it has been a bit drier in Brazil in recent days, sowing soy is not going smoothly everywhere. 'Those who have never been in prison cast the first stone', is the loosely translated above the tweet below.