The bulls dominated the grain market last trading session. The French Ministry of Agriculture revised the area of winter wheat upwards and estimates that 10% more has been sown than last year. In the US, trading is dominated by the rain that is predicted for the southern prairies for the Easter weekend. And even from South America came price-depressing news for wheat. However, the weather is not cooperating everywhere.
The May wheat contract on the Matif closed yesterday €4 lower at €210,25 per tonne. Grains also took a step back on the CBoT. Wheat lost 1% to close at $5.42 per bushel. Corn was down 0,8% at $4.81¼ per bushel. In soybeans, the loss was limited to 0,6% to close at $10.36 per bushel.
French growers have sown 4,63 million hectares of soft winter wheat. That is at least the latest estimate from the French Ministry of Agriculture. That is slightly more than the 4,57 million hectares that the ministry assumed in February and the latest estimate would mean an increase of 10% of the wheat area compared to last season. That is not surprising if we think back to the extremely wet conditions of last season and the relatively favorable weather of last autumn. The area of winter barley remains the same as the February forecast at 1,22 million hectares. A total of 1,74 million hectares of barley is grown, which is 3,6% less than last season. The area of durum wheat in France is the smallest since 223.000 at 1993 hectares.
In the US, both the American and European weather models are predicting rain on the southern prairies. According to weather forecasters, Texas and Oklahoma in particular will see relief in the form of rain for grain growers this Easter weekend. In the longer term, another low pressure area is expected in two weeks, which could also bring rain to the most important wheat state of Kansas.
Opportunities for South America
The Buenos Aires grain exchange expects 2025 million tons of wheat to be harvested in the 26/20,5 season. If that happens, it would be the largest wheat harvest in four years. Last season, 18,6 million tons of wheat were threshed in Argentina.
The trade war unleashed by Trump is likely to have a positive effect on South America. This is what Maximo Torero, chief economist at the FAO, the UN's food and agriculture organization, told Bloomberg. Countries such as Brazil, Argentina, Paraguay and Uruguay can benefit from the tensions between the economic superpowers if they position themselves as an alternative to grain from the US. "We have a very concentrated market in which few countries export these commodities." Although prices for wheat, corn and soy are stable, food for consumers remains expensive due to inflation and other higher costs such as energy and transport, Torero concludes.
Cold start in Ukraine
In Ukraine, the first half of April was not very favourable for agriculture, according to APK-Inform. At the beginning of the month, the mercury dropped to 11 degrees below zero. Due to the low temperature, sometimes in combination with snow, spring work has been delayed, according to the market bureau. A positive point is that it did rain last week. The moisture reserves in the soil have been largely replenished and are approaching the optimum level, according to the bureau.