In Europe and America, the grain market continues to struggle. An improved winter wheat situation in the US and moderate exports for the EU are putting pressure on the wheat market. India has problems of a completely different order. Due to high demand and tight stocks, wheat in India has gone well over the €300 mark. Getting the wheat price under control is a major challenge for the Indian government. In South America, the new soy season got off to a slow start. Now there is a dry period and farmers can make acreages with the seed drills.
The December wheat contract on the Matif closed yesterday €2 lower at €214,25 per tonne. On the Chicago exchange, wheat took a big step back for the second day in a row. The December contract closed 2,3% lower at $5.52¼ per bushel. Corn moved more sideways and closed 0,3% lower at $4.28½ per bushel. Soybean was between wheat and soybean and lost 0,8% to close at $10.03½ per bushel.
Winter wheat in the US is in better shape than a week ago, according to this week's Crop Progress report, which is a day later than usual due to Veterans Day in the US. 44% of the area now has a good or excellent rating from the USDA. That was 41% last week and 47% this week last year. The expectation is that with the rain that has fallen in recent days on the southern prairies and in much of the corn belt, the winter wheat situation in the US will continue to improve.
Of the planned winter wheat area, 91% has been sown, compared to 92% this week last year and 93% in the five-year average. The corn and soybean harvests are largely complete in the US, with 95% and 96% threshed, respectively.
Moderate exports for Europe
In Europe, we have to rely on wheat exports so far this season. Up to 10 November, 8,34 million tonnes of wheat have been exported, which is 30% less than in the same period last season. The major buyers, Egypt, Morocco and Algeria in particular, have imported less wheat from the EU. Several analysts point out that the wet growing season has also resulted in the EU having less wheat available for export this season.
Ukraine should use more of its own agricultural raw materials. This was the call made by the Ukrainian Minister of Agriculture. Ukraine is a major exporter of grain and vegetable oils, but at the same time it is also a major importer of food. According to the minister, Ukraine produces about 90% of all the agricultural goods it needs. By using more domestically produced food, money can be freed up for the army and the fight against Russia. Earlier this fall, Ukraine launched a campaign to encourage Ukrainians to buy more Ukrainian goods in order to support domestic producers.
Record price in India
In Europe and the US, the wheat market is struggling. This is different in India. Due to tight stocks and high demand, the wheat price in India is shooting through the roof. Despite the high price, players with stocks are cautious about bringing them to the market. Wheat is trading at record prices of around 30.000 rupees (around €335) per tonne. In April, the wheat price was 24.500 rupees (around €273) per tonne and the intervention price was 22.750 rupees (around €253) per tonne last harvest. The easiest way to get the wheat price down is to bring intervention stocks to the market. But that is easier said than done.
At the beginning of November, the Indian state had about 22,3 million tons of wheat in stock, up 400.000 tons from last year but well below the five-year average of 32,5 million tons. If the Indian government does not release a significant amount of wheat from the stock, the wheat price will continue to rise, according to local sources. The relatively tight intervention stock means that there is limited room for what can be sold. Suppose that, like last season, about 10 million tons are released to the market and the upcoming harvest (the first batches of which will be available in March) is disappointing, then the country will no longer have the room to absorb such a shortfall.
Sow soybeans quickly
In Brazil, sowing of soybeans is progressing steadily. According to AgRural, 67% of the planned area has been sown. Last season this week, the counter was at 61%. The weather is cooperating reasonably well for Brazilian farmers. After the rain last week, it will remain dry for a while now. This gives growers the opportunity to go into the country with the sowing machines. The Rosario grain exchange came with similarly favorable news. The recent rain has now subsided. "Farmers can sow soybeans quickly," the exchange writes. In the somewhat longer term, in a week's time, the chances of rain in Argentina and Brazil will increase again, according to the weather services.