Analysis Grains & Commodities
Wheat can't find its way up
The signs are there that wheat could take another step up. A rally just won't continue. After reports of setbacks in Russia, tempers were further tempered yesterday by positive expectations for the 2025 wheat harvest in the EU. Reports of good yields in Australia are also not doing the market any good from a grower's perspective.
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Choose the subscription that suits youThe March wheat contract on the Matif closed €3,75 lower at €329 per tonne. On the CBoT, wheat took a big step back by 1,5% to $5.33 per bushel. Corn took a step up by 0,8% to $4.40¾ per bushel. The biggest gainer in the last trading session was soybeans with an increase of 1,2% to $9.63 per bushel.
There is little honour to be gained for European wheat growers when it comes to pricing. After the challenging 2023/24 growing season, to say the least, the price does not make up for the lower yields and quality problems. Reports that less wheat will come from the Black Sea region in the second half of the export season do give the market some support, but are not enough to trigger a real rally. The moderate state of winter grains in Russia and Ukraine also brings some tension to the market, but does not really drive up the price yet.
From a grower’s perspective, it is quite surprising that a message from Strategie Grains seems to have more effect on the market. The French market bureau expects the 2025 wheat harvest in the EU to be 11% higher than in 2024. The higher wheat yield in Europe is largely due to an expansion in the area. The autumn and winter have been going fairly according to plan so far. The potential yield is therefore higher compared to last season.
Tightness on the world market
The Strategy Grains report also contains some food for thought. bulls in the market. Despite the larger harvest expected for the EU, the world market for wheat remains 'fairly tight'. The agency's market analysts point to the precarious situation of winter wheat in Russia. Compared to last year, Strategie Grains therefore predicts higher prices for both wheat and barley.
What is putting additional pressure on the wheat market are the good prospects in the southern hemisphere. In Australia, the combine operators can go all out. A week of dry weather is predicted in the largest growing regions. According to the preliminary figures, the wheat yields in Argentina are relatively good. That also brings some calm to the market.
Soy and (as far as already sown) corn are also doing relatively well in South America. With no crazy outliers in the weather forecasts for the next two weeks, that will not change. However, good demand for corn and soy from the US weighs more heavily for traders than the good harvest forecasts for South America.