Wheat is not yet ready for real winter weather

The December wheat contract on the Matif closed unchanged yesterday at €189,75 per tonne. In Chicago, wheat was the biggest loser, falling 4¾ cents to $5.22¼ per bushel. Corn also fell slightly, but its losses were limited to 1¾ cents at $4.23¾ per bushel. Soybeans also closed 1¾ lower at $11.23¼ per bushel.

Winter cereals and rapeseed in Europe are generally doing well. This is largely the gist of the Mars Bulletin published yesterday by the JRC, the scientific bureau of the European Commission. Sufficient dry days during the autumn allowed sowing on time, and the planned area for winter crops is practically in the ground. However, there are also several regions within Europe that are causing concern. Central Italy, eastern Hungary, and western Romania are experiencing dry spells. According to the JRC, there was 25% to 50% less rain compared to the multi-year average. Southern Romania and Bulgaria saw considerable rainfall in early October. While it is now becoming somewhat drier, there is still a significant backlog in sowing winter cereals. Just outside Europe, in North Africa and Turkey, growers are dealing with drought.

Hardy
Thanks to the relatively mild weather this autumn, winter grains are quite well-developed. This does pose a risk, however. Winter grains in large parts of Europe are still barely or not at all winter-hardy. In the Benelux, France, and Germany, most wheat is not yet winter-hardy at all, while much larger areas were already partially hardened off around this time last year. The same applies to a large portion of winter grains in southeastern Europe. This isn't a problem yet, but if it suddenly gets seriously colder, the risk of wintering out is relatively high.

The model used to calculate winter hardiness doesn't account for late-sown wheat in southeastern Europe, the JRC writes. This could increase susceptibility to wintering in Bulgaria, Romania, and Ukraine.

The USDA released its latest Crop Progress report for this season. The corn is almost completely harvested, with 96% of the area harvested. However, threshing is lagging behind. The five-year average for this week is 97%, and last year growers had already finished harvesting the corn.

Winter wheat sowing, however, is proceeding perfectly according to schedule. Of the planned acreage, 97% is in the ground, which is the same as last year and the five-year average. Of the wheat, 87% is above average, compared to 89% in the five-year average. Due to precipitation on the southern prairies, the winter wheat situation has improved somewhat this week. Of the acreage, 48% is now rated good or excellent, compared to 45% last week. Incidentally, this week a year ago, 55% of winter wheat in the US was rated good or excellent.

Competitive prices in tender
In addition to the more technical aspects of the Mars Bulletin and Crop Progress reports, it was announced yesterday that the Saudi Arabian state-owned wheat buyer, GFSA, has secured 300.000 tons of wheat in a tender. The majority of the wheat is reportedly coming from the Black Sea region, although the volume also includes some cheap new-crop wheat from Argentina. Tender prices reportedly range from $258 to $260 C&F (freight paid) for March delivery. Some analysts are calling these prices "aggressively low." In the current market, replacement wheat is reportedly worth up to $8 more. The high bids for the Saudi Arabian tender could indicate that traders anticipate that the ample supply of wheat could put further pressure on prices next spring.