Heat kills wheat in largest producing country

The March wheat contract on the Matif closed yesterday down €2,50 at €220,50 per tonne. On the CBoT, grains shed a coat yesterday. The March wheat contract that is about to expire closed down 3,4% at $5.46¾ per bushel. Corn lost 2,9% to $4.64¾ per bushel. Soybeans moved more sideways and held on to a modest minus of 0,2% to close at $10.22¾ per bushel.

The USDA's US corn and wheat acreage forecast presented yesterday at the Outlook Forum was a bit of a dampener for market sentiment. Corn is king say the Americans and looking at area, corn is the cork on which American arable farming floats. The USDA expects that 94.000 acres of corn will be sown next spring compared to 90.600 last year. According to the ministry, the wheat area will be 1 million acres larger and will therefore come to 47.000 acres. Soybeans are somewhat out of favor with the American farmer. The USDA calculates with 84.000 acres for the coming growing season compared to 87.000 acres last season.

Another chapter can be added to the saga surrounding US President Trump's trade tariffs. On Wednesday, he announced with great conviction that the 25% tariff on products from Canada and Mexico would be postponed by a month until April 2. Yesterday (Thursday, February 27), Trump seemed to have forgotten that and he mentioned March 4 (next Tuesday already) as the date for the introduction of the import duty. In addition, Trump announced that he wanted to increase the duty on products from China by another 10%.

In France, wheat is doing only moderately. 73% of the area is rated good or excellent by FranceAgriMer, compared to 74% last week. That is the second worst score in the last five years. Last year, after the extremely wet autumn and winter, 68% of wheat was rated good or excellent around this time. Last week, it was on average somewhat drier in France, but the wetness earlier this winter has already caused considerable damage that is now no longer recovering in the winter grains.

Extreme heat
In India, where the European Union's top brass is meeting to negotiate a free trade agreement, farmers are facing problems of a completely different order. According to weather reports, the hottest March ever recorded is threatening to happen next month. The maximum temperature in several provinces is likely to exceed 40 degrees Celsius, according to the Indian Meteorological Department. That is anything but good for crops such as wheat, chickpeas and rapeseed. According to local sources, February was already on the warm side with heat stress, and if extreme temperatures follow in March, wheat, for example, could become overripe with all the consequences for the yield.

Wheat is sown in India from October to December and the harvest runs from the end of February to May. After the EU, India is the largest producer of wheat. Over the past three years, wheat yields have been disappointing due to extreme weather. As a result, wheat stocks in India have shrunk considerably in price. On the domestic market, prices rose to a record high this month, converted by €350 per tonne. A very good domestic wheat harvest would therefore be more than welcome to calm the market. If yields are disappointing again, experts say India will have little choice but to reduce or abolish the 40% import duty on wheat.