Analysis Grains & Commodities
Heavy rain floods Australia
The weather in Europe is not entirely cooperating, but the European Commission remains reasonably optimistic about the expected grain harvest in the EU. There are very different problems in Australia. After heavy rain in New South Wales, rivers have burst their banks with all the consequences that entails. The Australian government has set up an aid program for the more than 50.000 affected people in the area. However, that is not enough to quickly help farmers in the province get back on track, say critics.
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Choose the subscription that suits youParis had to do it on its own this past trading session. The CBoT was closed for Memorial Day and London was on a bank holiday. The September wheat contract closed €1 lower at €205,50 per tonne.
The Joint Research Centre (JRC), the scientific bureau of the European Commission, published a new Mars Bulletin yesterday. The map with the weather extremes is a hodgepodge this time. In Northern France, the Benelux, Germany and a large part of Scandinavia, growers are suffering from a precipitation deficit, sometimes in combination with relatively warm weather. In parts of Spain, Portugal, Italy and North Africa, there is a surplus of rain. Ukraine, Romania and Turkey are struggling with relatively cold weather for the time of year.
Although the weather is not cooperating everywhere in Europe, the JRC remains relatively optimistic about the upcoming grain harvest. The average grain yield is estimated at 5,67 tonnes per hectare. That is 5% above the five-year average of 5,40 tonnes per hectare. The wheat yield is forecast by the JRC at 6,04 tonnes per hectare, compared to 5,77 based on the five-year average. The yield of winter barley is estimated at 5,28 hectares. That is 10% above the five-year average of 4,81 tonnes per hectare. Rapeseed is doing somewhat less well compared to grains. The average yield is 3,17 tonnes per hectare, just above the five-year average of 3,16 tonnes per hectare.
floods
In Australia, there are problems of a completely different order. Heavy rain in the province of New South Wales has caused flooding. In just four days, 600 millimetres of water fell, which is about half of what falls in the region in a year. More than 50.000 people were cut off from the outside world. For those affected, the Australian government has set up an emergency fund that pays out 1.000 Australian dollars (about €568) per adult and 400 Australian dollars (about €227) per child. In addition, people can apply for income support for up to 13 weeks. Dugald Saunders, leader of the NSW Nationals, calls this a good first step, but is critical. "That money is not enough to repair the fences in the pastures. They are not buying new engines and machinery to keep their farms running," Saunders told 7News.
Meanwhile, Australian farmers are also dealing with relatively low grain prices. This is unlikely to change in the short term, several analysts told Reuters. Demand from China has been disappointing so far and Australian grain exporters are suffering from strong competition from Russia. The expectation is that the final stock of grain in Australia will therefore be relatively large. This could result in extra grain coming onto the market in the last quarter of 2025. Australian farmers and traders will then have to get rid of their stock to make room for the new harvest, according to several analysts.