European wheat exports are not great this season. FranceAgriMer expects French wheat exports to fall to their lowest level since 1996/97. The weather forecasts are giving somewhat conflicting signals. In the Black Sea region, mild temperatures are reducing the chance of wintering, while the southern prairies in the US are set to get cold again this weekend. Rain in Brazil is good for growth, but is hampering the harvest of early soybeans.
The March wheat contract on the Matif closed yesterday €3 lower at €228,25 per tonne. On the CBoT, wheat closed 0,1% higher at $5.47 per bushel. Corn made a more convincing move higher, rising 0,9% to $4.78¾ per bushel. Soybeans, in contrast to grains, lost some ground on the Chicago exchange. The March contract closed 0,5% lower at $10.42¾ per bushel.
FranceAgriMer is keeping its forecast for French wheat exports to non-EU countries this month the same as it had in December. The agency, which falls under the French Ministry of Agriculture, is counting on exports of 3,5 million tonnes this season. That is 66% less than last season and the lowest exports since at least 1996/97. Last month, FranceAgriMer reported that exports were at their lowest level since 2000/01.
Combination of factors
The moderate exports this season are due to disappointing demand from Algeria and China, according to FranceAgriMer. Due to diplomatic tensions between Paris and Algiers, no French wheat has gone to Algeria this season. China is also buying a lot less wheat from France this season. The moderate to poor wheat harvest in France also plays a role in the moderate exports, as does the strong competition from relatively cheap wheat from the Black Sea region, according to FranceAgriMer. Ukraine exported 15 million tons of grain up to January 23,6, compared to 20,6 million tons last season, the Ukrainian Ministry of Agriculture announced yesterday.
The export forecast for barley has been lowered by 200.000 to 1,9 million tonnes by France AgriMer. That is half of what was exported last year, mainly due to disappointing demand from China. The stock of corn has been revised upwards. The service has increased the stock from 2,7 million tonnes in December to 2,8 million tonnes this month. That is the largest stock in ten years.
Always something with the weather
The weather reports are giving somewhat conflicting signals. For the Black Sea region, relatively mild weather is predicted for the time of year. Further north in a band from Belarus to the northern Caucasus it is colder, but there the cold front was preceded by snow. According to experts, the chance of wintering out is therefore small. In the US, concerns about wintering out of wheat are increasing. In parts of Oklahoma, Kansas and Texas, up to 7 degrees of frost are predicted this coming weekend. The chance of precipitation is estimated by the American weather service at 30% to 50%. According to local sources, there is a real chance of frost damage in places where no snow falls.
Soy was under some pressure last trading session due to the good harvest forecasts for Brazil. Meteorologists also expect sufficient rain for the coming week to keep the crops in the northern and central parts of Brazil growing. In the southern part, where it is dry, the chance of rain is also increasing. The only disadvantage of the changeable weather is that the harvest of early soy is going at a slower pace. Together with the warm dry weather in Argentina, this ensures that the downward space for soy remains somewhat limited according to various analysts.