Analysis Grains & Commodities
Winter weather and threshing go hand in hand at the grain market
The wintry weather in America, and to a lesser extent in Russia, led to a rally in wheat prices on the Chicago stock exchange last week. It always takes a while for frost damage to grains to become visible. Couple that with the significant amounts of snow that fell in the US, and it's understandable that the market took a step back yesterday. A little further south, in Brazil, it's not winter but harvesting that's drawing attention. Soybean threshing is slightly ahead of last year, while corn is lagging behind.
Would you like to continue reading this article?
Become a subscriber and get instant access
Choose the subscription that suits youThe March wheat contract on the Matif closed yesterday down €2 at €189 per tonne. On the CBoT, wheat also closed lower, down 7 cents to $5.22½ per bushel. Corn fell 2¼ cents, closing at $4.28¼ per bushel. Soybeans followed suit, trading down 6 cents to $10.61¾ per bushel.
The weather picked up some steam last week, especially in the US grain market. Concerns about the cold snap gripping much of the US are not really taking hold. In Kansas, the largest winter wheat state in the US, approximately 5 to 7,5 centimeters of snow fell last weekend. This provides the winter wheat with reasonable protection from the severe to very severe frost. In areas with less snow, frost damage certainly cannot be ruled out, but it will take a few weeks before it becomes clear where the wheat has overwintered, according to several analysts.
The snow has another advantage for wheat on the southern prairies. It's dry in the southern US, as last week's drought monitor shows. The snow, of course, also brings moisture.
Russian wheat slightly more expensive
SovEcon released its wheat export forecast for Russia yesterday. The agency estimates that Russia will export 3 million tons of wheat in January. In December, 4,2 million tons crossed the border, but in January of last year, exports remained at 2,2 million tons. The price of Russian wheat rose by $1,50 compared to the previous week to $229 per tonne FOB (delivered on board), according to market bureau Ikar. The second consecutive week of bad weather in the Black Sea region is supporting the market, according to analysts.
Ukraine is also struggling somewhat with wheat exports. So far this season, the country has exported 8,37 million tons of wheat. A year earlier, the figure was 10,61 million tons.
Nearly 5% of Brazilian soy and corn threshed
Brazil isn't experiencing the winter slumps that are common in the Americas and the Black Sea region. Combine harvesters are working in the soybeans there. AgRural reports that 4,9% of the soybean acreage in Brazil has been harvested. Last year, the harvest this week stood at 3,9%, and last week, 2% of Brazilian soybeans were harvested, according to AgRural's data. Compared to the previous forecast from December, AgRural has revised its harvest estimate upward by 600.000 tons to 181 million tons.
The corn harvest is progressing slightly slower than last year. 5% of the corn has been threshed, compared to 8,6% last year this week. AgRural estimates the total corn harvest (first crop and subsequent crop) at 136,6 million tons. However, the sowing of the subsequent corn crop is ahead of last season. Of the planned area, 4,7% has been sown, compared to 2,2% last year.