A cold weekend in the south of Russia is not making the wheat market nervous. Rain in the US has more influence on the market, although that could also be less positive than expected. Nevertheless, winter wheat in the US is in better shape than a week ago, according to the Crop Progress report. Spring work is going well in the US, as in Europe. China gave the American agricultural sector a jab, but that had limited effect.
The May wheat contract on the Matif closed yesterday €1,75 lower at €207,50 per tonne. On the CBoT, wheat took a big hit and closed 2,7% lower at $5.15½ per bushel. Corn also closed in the red but the loss was limited to 0,7% at $4.75½ per bushel. In contrast to grains, soybeans were up. The May contract closed 0,2% higher at $10.52 per bushel.
Peace between Russia and Ukraine still seems far away. However, there is talk of a ceasefire. Kiev proposed a 30-day truce. Russia wants to keep it to three days, starting on May 8. May 9 is the commemoration of the victory over Nazi Germany in 1945 in Russia. In terms of weather, there are some reports that there may be some frost damage in the south of Russia after a cold night last weekend. It takes a while for damage to become visible and the extent is most likely limited, according to analysts. That was not enough to turn the mood on the wheat market.
SovEcon expects Russia to export 2,2 million tons of wheat in April. That is more than the 1,9 million tons exported in March and roughly equal to exports in April 2024. Other bearish news for wheat comes from the US. Rain is forecast for the southern prairie states. It is a fine line between rain that is beneficial to crops and flooding. If everything in the 14-day forecast falls, flooding is lurking in Texas and Oklahoma, according to various sources.
Wheat is growing
The water that fell in part of the wheat belt last week has done winter wheat good, according to the new USDA Crop Progress report. 49% of winter wheat now has a good or excellent rating, compared to 45% last week. Last year in this week, 49% of winter wheat was also good or excellent. More than a quarter, namely 27% of winter wheat, is in the ear. The five-year average is 22%, but last year growth was slightly ahead of this season with 28% in the ear. Spring wheat and barley sowing is going well in the US with 30% and 37% sown respectively. The five-year average for spring wheat is 21% sown this week and for spring barley 29%.
Corn planting is also progressing well. According to the USDA, 24% of the planned corn area has been planted. The five-year average is 22%, but this week last year a quarter had been planted. Texas has the furthest planted corn growers at 74%. 5% of the corn is above ground compared to 4% in the five-year average. Of the planned soybean area, 18% has been planted. The five-year average is 12%.
Biofuel
According to some analysts, the relatively favorable weather this spring reinforces the idea that American farmers could sow more corn and that this expansion will be at the expense of soy. Soy can be sown later without losing yield compared to corn. However, that is not the main reason that soy took a step during the last trading session. According to some experts, Trump could announce that more soy oil should be mixed with diesel. For bio-ethanol (which is largely fired from corn), Trump announced yesterday that E15 gasoline, in which up to 15% ethanol is mixed, will be allowed to be sold in the US this summer. That was a big wish of American farmers because it gives them an additional sales channel for corn. Until now, the government has limited the sale of E15 during the summer months due to concerns about smog. According to the biofuel industry, these concerns are unfounded.
An additional sales market for American agricultural products is desirable from the farmer's point of view. Because although Trump says he is in talks with China about normalizing trade relations, Beijing announced that it can do without American agricultural products. According to experts, the market's limited response to this China sting is because Washington is working on 18 major trade deals. The negotiations with Japan, India, South Korea and Vietnam are said to be in the final phase.