Analysis Grains & Commodities
Return of cold problem for Ukrainian wheat
After a milder spell at the end of last week, frost is returning to Ukraine. Now that the snow has melted, the cold weather could cause major problems for winter grains, warns the Ukrainian Farmers' Union. In Russia, wheat has weathered the winter relatively well. Therefore, SovEcon issued a substantial increase in its yield estimate. But the most dangerous period for wheat is yet to come, according to the market bureau. In the US, arable farmers are favoring soybeans over corn for the coming season, according to a Bloomberg poll.
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Choose the subscription that suits youThe March wheat contract on the Matif closed yesterday up €0,25 at €190,75 per tonne. On the CBoT, wheat rebounded strongly last trading session, closing 9.5 cents higher at $5.47 per bushel. Corn moved more sideways, gaining 0.5 cents to $4.27 per bushel. Soybeans closed down 0.5 cents to $11.33.5 per bushel.
The return of cold after a thaw could cause significant damage to winter wheat and rapeseed in Ukraine, warns the Ukrainian Farmers' Association (UAC). Since early January, it has been cold, with several cold records broken. In northern, western, and parts of central Ukraine, winter crops were protected from the worst of the cold.
Late last week, temperatures rose and the snow melted. This caused water to accumulate on the land, which has now frozen. "There are risks for both winter wheat and rapeseed," the UAC wrote in a report. The association also noted that the weather risks could lead to significant adjustments in the harvest forecast. Approximately 4,5 million hectares of winter wheat and 1,1 million hectares of rapeseed were sown in Ukraine last autumn.
SovEcon raised its wheat harvest forecast in Russia by 2,1 million tons to 85,9 million tons. Wheat in Russia is in better shape than average as winter approaches, SovEcon writes. Due to relatively high soil moisture last autumn and ample snow cover during the winter, wheat in Russia is generally in good condition, according to the market bureau.
SovEcon has increased the winter wheat acreage by 200.000 hectares to 15,8 million hectares. This increase is due to less wheat being wintered than previously predicted. The acreage is therefore the same as last season. According to the Russian Ministry of Agriculture, only 3% of the winter wheat is in poor condition. This is a historically small percentage.
Although winter wheat is doing well in Russia, that doesn't necessarily mean a good harvest is on the horizon. The most dangerous period for winter wheat is from March to May, according to SovEcon. "In recent years, we've seen frequent extreme weather events during this period," writes Andrei Sizov, director of SovEcon. Frost damage to Russian wheat in 2024 led to a 30% increase in the wheat price on the CBOT, Sizov adds.
Corn is not King
In the US, arable farmers appear to have a slight preference for soybeans over corn for the coming season. At least, that's the conclusion drawn from a Bloomberg survey of acreage projections in the US. Soybean acreage will grow by 3,8 million acres, while 3,8 million fewer acres of corn will be sown. Corn is a relatively expensive crop for American arable farmers, and with prices around or below cost, growers are opting for the cheaper soybean crop.
Sowing extra soybeans is a bit of a gamble, according to some analysts. In Brazil, the largest soybean producer, growers are heading for a record harvest. The relationship between China, the world's largest soybean buyer, and the US is somewhat strained, to say the least. The trade war unleashed by Trump is creating considerable uncertainty.
This is also reflected in the figures for throughput at the Port of Los Angeles. In January, exports from the port, one of the largest in the US, fell by 8%. This is the lowest export volume in three years. Soybean exports through Los Angeles fell by as much as 80% in January compared to the same month last year.