The war in Ukraine is once again attracting the full attention of the grain trade. Russian attacks on the Ukrainian electricity supply and the possible deployment of long-range missiles by Kiev are translating into a higher war premium on the wheat market. There are cautiously positive sounds for the 2025 wheat harvest. The Ukrainian Minister of Agriculture expects to thresh more wheat due to a larger area and in the US the weather is cooperating well for wheat growers this autumn.
The December wheat contract closed yesterday €1,75 higher at €218 per tonne. On the CBoT, wheat was still somewhat stronger, closing 2% higher at $5.47¼ per bushel. Corn was up 1,2% at $4.29¼ per bushel. Soybeans moved to the January contract, which closed 1,1% higher at $10.09¾ per bushel.
The war in Ukraine has been going on for exactly one thousand days. The violence has flared up in recent days. After the large-scale missile attacks by Russia on the Ukrainian energy infrastructure last weekend and the deployment of North Korean mercenaries, the Americans have given the green light for the use of long-range missiles by Ukraine on Russia. The fear that the war will escalate further is increasing and that is reflected in a higher war premium in the price, especially on the wheat market.
Russian grain harvest falls
Russia has harvested 1% less grain up to November 12 compared to last season. This was reported by the Russian news agency Interfax, which based its findings on information from the Russian statistical agency Rosstat. In total, Russian farmers have harvested 124,3 million tons of grain compared to 141 million tons last year. 95% of the sown area has been harvested, which is almost the same as last season on the same date. The sunflower harvest is 13,9 million tons compared to 14,6 million tons last season. Russian farmers have also harvested slightly less beets, namely 35,5 million tons compared to 37,5 million tons last season.
Ukraine can harvest 2025 million tons of wheat in 25, compared to 22 million tons in the preliminary harvest figures for 2024, Ukrainian Agriculture Minister Taras Vysotskiy said in an interview with Reuters. The larger harvest is due to an expansion of the sown area. After a record dry summer and autumn, grain growers in Ukraine have been growing winter wheat under dry conditions in the hope of rain later in the autumn and a mild winter. Last month, the Ukrainian weather service reported that almost all winter wheat in Ukraine was underdeveloped due to the drought. 90% of the sown area is above and the yield ultimately depends on the weather in the winter and spring, according to Vysotskiy. The minister also expects that Ukrainian farmers will sow more corn and less soy next spring. Due to relatively high margins on soy compared to corn, Ukrainian growers also sowed soy last year. Now that soy prices have fallen significantly and corn is holding up better, Vysotskiy expects 500.000 hectares less soy and 500.000 hectares more corn to be grown next season.
Winter wheat stand improved again
The USDA released its second-to-last Crop Progress report of the season yesterday. The corn and soybean harvests are nearly complete and are no longer included in the report. Winter wheat planting is also well underway with 94% of the planned area planted. That is the same as last year, but the five-year average is 96%. The condition of the winter wheat has improved with 49% of the area rated good or excellent compared to 44% last week. The ten-year average for this week is 50% good or excellent. The weather is quite favorable for winter wheat growers in the US, we can see from the Crop Progress report. The crop has benefited from rain. In recent days, more precipitation has fallen in the major wheat regions of the US and analysts expect the wheat condition to improve further.
The undertone in the soy market is bearish according to analysts. Due to a few large orders of, among others, 135.000 tons of soybean meal to the Philippines, 30.000 tons of soy oil to India and 261.000 tons of soybeans to Mexico, the market rebounded yesterday. However, the volume of these orders is too small to really bring about a turnaround in the soy market.