The global wheat supply is not overflowing. To a certain extent, this is creating a bottom in the market. There is also no real signal that the market will rise. In Argentina, the weather is reasonably good this season. The Rosario stock exchange raised its yield forecast for wheat and noted that corn and soybeans have had a good start.
The March wheat contract on the Matif closed yesterday €1,75 lower at €299 per tonne. On the CBoT, wheat closed 0,9% lower at $5.38¾ per bushel. Corn fell more sharply, closing 1,4% lower at $4.31¾ per bushel. Soybeans, unlike grains, closed in the green, albeit marginally. It was a quarter-cent gain, bringing the closing price to $9.95¾ per bushel.
That last season was not a good wheat year in North-West Europe is also reflected in the figures for the harvest in the United Kingdom. The average yield of wheat in the UK is 7,3 tonnes per hectare, according to AHDB in the final harvest estimate. The yield is therefore 10% lower than last season. In total, farmers in the UK harvested 11,1 million tonnes of wheat. The harvest is therefore 20% lower than last year. The hectare yield for rapeseed was 10% lower, just like wheat, at 2,8 tonnes per hectare. Add to that the fact that a quarter less rapeseed was sown last growing year and the total harvest remains 824.000% lower than last year at 32 tonnes.
Favorable weather
In Argentina, the growing season is going much better. The Rosario exchange raised the yield forecast for wheat by 500.000 tons to 19,3 million tons. The cooler weather in the spring month of November for the southern hemisphere and sufficient rain have helped the growth of wheat. The yield estimates for corn and soybeans have remained the same at 50 to 51 and 53 to 53,5 million tons respectively. The exchange notes that the growing conditions for soybeans and corn are good due to the favorable weather. The growing season for soybeans and corn has just started in Argentina. The harvest of wheat has started and usually continues until January.
deforestation
Deforestation legislation in South America remains a sensitive issue. We tend to think of the European law that prohibits the import of products from deforested areas, the entry into force of which has been postponed by a year. In Brazil, however, there is already a moratorium that prohibits traders from buying soy from plots of land where the Amazon rainforest has been cut down. According to the farmers' organization Aprosoja, this regulation does not work out well for the growers in practice. Aprosoja even speaks in a statement about a purchasing cartel. "The soy moratorium, signed in 2006, was initially presented as a solution to prevent illegal deforestation in the Amazon. The pact has degenerated into an instrument of economic exclusion, arbitrarily discriminating against producers who strictly adhered to Brazilian environmental legislation." Earlier this year, the province of Mato Grosso passed a law that removes certain tax benefits for companies that adhere to the moratorium. Environmentalists accuse the soy trade of trying to weaken the moratorium, which scientists and conservationists say is effective at curbing deforestation.