Supply concerns take hold of wheat market

The March wheat contract on the Matif closed yesterday €5 higher at €232 per tonne. On the CBoT, wheat closed 1,4% higher at $5.40½ per bushel. Corn also moved up, but the increase was limited to 0,3%. The March corn contract on the Chicago exchange closed at $4.47¾ per bushel. Soybeans, in contrast to grains, moved back and closed 0,5% lower at $9.69½ per bushel.

SovEcon expects Russia to export 2025 million tonnes of wheat in the 26/36,4 season. This is 17% less than the forecast for the current season. The lower wheat exports are partly due to a moderate yield forecast for the upcoming harvest. In addition, SovEcon points to the relatively small final stock that will remain after the 2024/25 season. Incidentally, the market agency has lowered the export forecast for this current season by 400.000 tonnes to 43,7 million tonnes.

According to the Russian State Weather Service, the mild weather in the European part of Russia is making it difficult for winter grains to survive the winter. The plants use more sugars to breathe and on the warmest days, winter wheat could start growing again. An overdeveloped crop is susceptible to wintering if it gets really cold in Russia in the coming months. Due to drought in the past autumn, winter wheat in Russia is already doing moderately to poorly on average, as reported by the Russian Ministry of Agriculture earlier this month.

Drought in Argentina
Corn and soy players are mainly concerned with the weather forecasts for Argentina and Brazil. In Brazil, the weather is quite cooperative for arable farmers. No extreme temperatures and occasional rain ensure that the crops grow well. That is not the case in Argentina. According to Commodity Weather Group, about a third of the crops in Argentina are dealing with drought. That does not seem to change in the coming week. Some rain is predicted for Argentina, but that will pass by the driest regions according to the weather models.