Large harvest overshadows record wheat consumption

The May wheat contract on the Matif closed yesterday €3,75 lower at €218,25 per tonne. On the Chicago exchange, wheat also took a step back and closed 0,6% lower at $5.32 per bushel. Corn moved more sideways and held on to a minus of 0,3% to close at $4.50 per bushel. In contrast to grains, soybeans were on the rise during the last trading session. The May contract closed 1,6% higher at $10.16¾ per bushel.

The European Commission estimates that the upcoming wheat harvest in the EU will be 11,3% larger than the 2024 harvest. That sounds more spectacular than it is. The 2025 harvest is estimated at 132,9 million tonnes compared to the 119,4 million tonnes of the last harvest, but the yields of 2022 and 2023 were both above 133 million tonnes. According to the Commission, the fact that more wheat will be threshed in the EU in the upcoming harvest is partly due to an expansion in area and partly to higher hectare yields due to better growing conditions. The total wheat harvest in the world is estimated by the European Commission (which falls back on figures from the IGC) at 806,7 million tonnes and if that is achieved it will be a record harvest. For comparison: the USDA assumes 797,2 million tonnes in the latest Wasde report. In addition to the harvest, wheat consumption also peaked, reaching a record high of 812,7 million tonnes.

Not only the European Commission ensured bearish news on the grain market also the weather reports have a price-depressing effect. For the south of Russia and a part of Ukraine there is rain in the forecast.

Corn also took a hit from the weather forecasts, but Brazil is the main focus for that. The start of corn cultivation after soy in Brazil is going smoothly, partly due to the smooth harvest of soy. In the latest update, Conab writes that 76,4% of the soy has been harvested, compared to 66,3% last season. Yields of soy are generally good and the total soy harvest is on track for a record. However, top yields are not being achieved everywhere in Brazil. In Rio Grande du Sul (the third largest soy province), the crop has not yet fully matured and, according to local sources, yields are somewhat disappointing due to high temperatures and a lack of moisture.

Despite the positive news from Brazil, it became clear yesterday that the US can still make a big impact on the soy market, as evidenced by the rise on the CBoT. A weaker dollar and the expectation that farmers in the US will sow less soy next season, supported the market.

trade war
Trump's import tariffs and the counter-reactions to them from Canada and Mexico, among others, continue to cause uncertainty. Next Wednesday, April 2 (April 1 could be taken as a joke according to Trump), if everything goes according to plan, there will actually be a 25% levy on products from Mexico and Canada. However, this plan has already been postponed twice. Another postponement would surprise no one.

India is charting its own course when it comes to US trade policy. Where the EU and China, for example, are being driven into a corner, India is applying more of the Mark Rutte strategy. India is trying to win over the US government by not going on a full-on counterattack, but by looking for a compromise. For example, India is said to be prepared to scrap import duties on various agricultural products from the US in order to reach a deal with the Trump administration. That is what Reuters reports, based on anonymous sources involved in the negotiations.