Competition from the Black Sea region is often cited as the cause of the poor European grain exports. This theory is not supported by the Russian export figures. In the first half of the season, Russia exported 5,6% less wheat. Growers in Brazil have problems of a completely different order. An expected good grain harvest painfully exposes the lack of sufficient storage in the country.
The March wheat contract on the Matif closed yesterday down €2,75 at €231,25 per tonne. On the CBoT, wheat made a small move up 0,2% to $5.46¼ per bushel. Corn closed down 0,5% at $4.74½ per bushel. Soybeans were mostly sideways, eventually closing up 0,1% at $10.43 per bushel.
European wheat exports continue to falter somewhat. In the current season up to and including 12 January, the EU exported 11,49 million tonnes of wheat. Last year at this time, the figure was 17,63 million tonnes. Strong competition from wheat from the Black Sea region is cited by analysts as a major cause of the moderate European exports.
This theory is not confirmed by the export figures announced by the Russian Grain Union. In the first half of the export season (July to December 2024), Russia exported 5,6% less grain compared to a year earlier. Exports in the past six months amounted to 34,26 million tonnes, compared to 36,21 million tonnes a year earlier. Wheat exports were 0,7% higher, at 30 million tonnes. Barley exports were 27% lower at 2,9 million tonnes. Russia exported 46% less corn compared to a year earlier, namely 1,3 million tonnes, according to the Grain Union.
"Based on the available grain stock for export this season of 56 million tons, of which 46 million tons are wheat, as of January 1, 61% of the grain stock was exported and 65% of the wheat stock," Elena Tyurina, chief analyst of the Grain Union, explained to Interfax. "So there are still 21,7 million tons of grain available for export, including 16 million tons of wheat."
Problems due to large harvest
Brazil expects a good grain harvest for the 2024/25 season. The total harvest is estimated at 322,4 million tons by the Brazilian government agency Conab. The large harvest brings problems with regard to the storage capacity available in the country. According to the Brazilian CBS, there is only 222,3 million tons of storage available. Another solution must therefore be found for 31% of the harvest. Part of the harvest can be sold and exported immediately. Due to wet weather during sowing, some of the crops were sown late and the harvest moment is therefore being postponed. Everything will soon be ripe at the same time, which makes the limited storage capacity even more urgent, local sources warn.
"The storage deficit reached 124 million tons in 2024, and this year it is likely to increase by at least 5 million tons. With a record soybean harvest and a strong corn harvest, the scenario could become even more critical," warns Paulo Bertolini, president of the mechanization industry interest group, in Brazilian media. Investing in additional storage capacity on the farm would be a solution. Bureaucracy prevents investments in silos, according to Bertolini.
"For around 2 to 3 million real (around €320.000 to €480.000) a grower can build a simple storage facility. That is roughly the price of a few tractors. A bank guarantee is sufficient to buy a tractor. However, building a silo also requires an environmental permit, an installation permit, an operating permit and a mortgage on the land. All those bureaucratic layers make financing expensive and slow." Without sufficient storage on farms, traders and processors have to absorb the costs of storage. According to Bertolini, this inefficiency in the chain ultimately translates into prices.