Lack of rain is not only a problem in parts of Europe. In China, the world's largest wheat producer, farmers are also suffering from a lack of precipitation. However, this news has little effect on the market. Rain has fallen in the southern US, but at the wrong time. Soy is under some pressure due to reports from South America.
The May wheat contract on the Matif closed yesterday €1,50 lower at €201,75 per tonne. The most heavily traded September contract closed €2,25 higher at €205,50 per tonne. On the CBoT, wheat showed a cautious plus, closing 0,9% higher at $5.19 per bushel. Corn gained a cent to $4.47½ per bushel. Soybeans lost some of their income in the last trading session, closing 0,3% lower at $10.34¾ per bushel.
European wheat exports continue to be a bit of a mess. According to data from the European Commission, 5 million tonnes of wheat have been exported up to and including 17,81 May. That is 34% less than in the same period last season. Romania is by far the largest wheat exporter in the EU with 4,78 million tonnes. It is followed by Lithuania with 2,39 million and Germany with 2,20 million tonnes. France, the largest wheat producer in the EU, falls just outside the top 3 with an export of 2,05 million tonnes and is closely followed by Latvia, which exported 2,03 million tonnes of wheat.
Heat and drought are becoming a problem for wheat in China, according to various sources. China is the largest wheat producer in the world and about a third of the Chinese wheat area is affected by the hot and dry conditions. If the yields there really start to fall short, this could create extra demand for wheat on the world market. There are only a few ifs and buts attached to this and that is one reason why these reports have relatively little effect on the prices in Paris and Chicago.
Disease pressure
In the US, it is not drought this time but rain that is creating a mood. Heavy showers passed through Oklahoma and northern Texas. That is not what wheat growers need now. The crop is largely in the ear there and the wet conditions are mainly increasing disease pressure. The precipitation is coming too late for the yield, according to several local sources. Overall, winter wheat in the US is doing relatively well. With 51% of winter wheat rated good or excellent by the USDA in this week's Crop Progress report. That is the best situation in five years.
Soy is under some pressure due to reports from South America. The yield of soy on the continent will probably be millions of tons higher than last season, according to various sources. In Brazil, the soy harvest is now largely behind us. In Argentina, growers are also making good progress with the harvest. According to local sources, around 40% of the crop has been threshed there. According to analysts, this reinforces the moderate mood in soy.