Analysis Grains & Commodities
Russians sow less wheat due to low prices
Wheat isn't exactly the most profitable crop for most arable farmers. And if prices are also moderate, as is currently the case, the wheat balance is completely wiped out. This problem isn't unique to the Netherlands. In Russia, grain growers are also seeking alternatives to wheat. Due to the disagreement over the US government's budget, the USDA didn't release the Wasde report, and the usual export figures are also missing. A support program to be established for soybean growers struggling due to the trade war is also on hold.
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Choose the subscription that suits youThe December wheat contract on the Matif closed yesterday €2,50 higher at €190,50 per tonne. On the CBoT, wheat took a small step back, closing 0.5 cents lower at $5.06½ per bushel. Corn closed 3¾ cents lower at $4.18¼ per bushel. Soybeans were also in the red, closing 7¼ cents lower at $10.22¼ per bushel.
The fact that wheat yields little to nothing for a grower isn't a problem unique to the Netherlands. Russian growers are also seeking an alternative to winter wheat. According to the Russian Deputy Minister of Agriculture, Russian growers are sowing 6,2% less winter wheat than last season. This brings the total area of winter wheat in Russia to 28,2 million hectares. The reason for the reduction in area, as mentioned, is the crop's poor financial returns. Instead of wheat, Russian arable farmers see more benefit in growing oilseeds, according to the Deputy Minister.
Record harvest in Argentina
Argentina is heading for a record wheat harvest this season. That's what the Rosario stock exchange expects. They've raised their harvest forecast by 3 million tons to 23 million tons. Market bureau Expana released new figures on the EU wheat harvest. They've revised European wheat production upwards by 300.000 tons to 136,4 million tons. This is below the latest USDA forecast, which anticipated a European harvest of 140 million tons.
The USDA was scheduled to release the October edition of the Wasde report yesterday. Due to the US government shutdown, this report (along with the Crop Progress report and the export figures) has been suspended until further notice.
Drought area expands
The drought monitor was released this week. It shows that the drought is spreading across the Corn Belt. Of the corn acreage in the US, 31% is now in drought conditions, compared to 28% last week. The dry weather is favorable for the corn and soybean harvest, but crops that weren't yet ripe are becoming overripe, according to various local sources.
Another thorny issue for American agriculture remains the trade conflict with China. China has now introduced an export licensing system for rare earth metals. Beijing claims this is in the interest of national security, but several analysts believe China is trying to send a message to US President Trump. A meeting between Trump and Xi Xi is scheduled for later this month in South Korea, and in the lead-up to that summit, Trump has already made several comments about soybean exports to China.
The US government is working on a support program for American farmers who are more or less caught in Trump's geopolitical gambit. However, due to the shutdown, this program is on hold, as Agriculture Secretary Rollins announced yesterday. Meanwhile, farmers are holding onto their freshly harvested soybeans while awaiting the USDA's upcoming decisions, according to several US sources.