Yield estimates remain a hot topic of conversation. Yesterday, China released a forecast for its wheat harvest. To the surprise of many analysts, the drought affecting farmers in the main growing regions is completely ignored. In Europe, the wheat harvest is expected to be higher than last season, and the trade sector is already anticipating tonight's Wasde report. Meanwhile, the Kremlin is considering measures to boost Russian grain exports.
The September wheat contract on the Matif closed yesterday €4,50 higher at €201,75 per tonne. On the CBoT, wheat rose 1,4% to $5.50¼ per bushel. Corn, on the other hand, took a step back, closing 1,3% lower at $4.07¼ per bushel. Soybeans remained virtually unchanged, up a quarter of a cent to $10.12½ per bushel.
The mystique surrounding the Orient hasn't dissipated when we look at the new Chinese wheat yield estimate. Despite severe drought in the main Chinese growing areas, Chinese authorities predict that the 2025 harvest will be 0,1% lower than the 2024 harvest. This season's harvest is estimated at 138,16 million tons, compared to 138,22 million tons last season. This is remarkable, to say the least, according to various sources. In the provinces of Henan and Shaanxi, where roughly a quarter of China's wheat is grown, it has been exceptionally dry in recent months. At the end of May, farmers in the area feared that the harvest would be halved due to the challenging growing conditions.
It will be interesting to see what effect this will have on global wheat demand. In 2022 and 2023, China was the largest wheat importer. Last year, it was clearly noticeable that China imported less. In the first half of this year, demand from China has fallen even further. Australian exporters are particularly affected, but as they seek other sales channels, this is dampening the mood on the global market.
Export incentive
Exports are also struggling in Russia. The Kremlin wants to take measures to boost exports. July's agricultural exports are on track to be the lowest since 2008. This is partly due to the slow start of the grain harvest in Russia. Another factor is that farmers are in no hurry to get rid of their stock. Prices were relatively low this season, and while the poor harvest in the EU, for example, led to expectations for a market recovery towards the end of the season, it failed to materialize. Rushing now to achieve the same price as a year ago also seems pointless, Russian growers seem to think.
According to Stratégie Grains, the European wheat harvest will be 15% higher than last season. The total wheat harvest, according to the agency, will therefore amount to 130,7 million tons. Stratégie Grains has lowered its corn yield forecast for the EU by 3 million tons to 57,4 million tons. The USDA estimated a yield of 60 million tons in the latest Wasde report.
The July edition of the Wasde report will be released tonight (Dutch time). Reuters conducted a poll among traders and analysts. It's notable that they expect the report to be neutral to slightly positive for US corn, soybean, and wheat yields. bullish That's logical for wheat, given the drought. For corn and soybeans, where the growing season is progressing reasonably well, some sources had different expectations earlier this week.