Grain market reacts to chances of rain in the US

The May wheat contract on the Matif closed €0,50 lower yesterday at €195,50 per ton. On the CBoT, wheat took a larger step downwards, closing 5 cents lower at $5.99¼ per bushel. Maize recorded a very modest gain of half a cent to $4.54¼ per bushel. Soybeans closed 10 cents lower, coming in at $11.64½ per bushel.

Brent crude was on the rise and closed above $100 per barrel again yesterday. The seizure of two container ships in the Strait of Hormuz by Iran clearly had an effect on the oil market. The grain market did not follow the movement of the oil market. Outside the energy market, it is cautiously assumed that some talks between the US and Iran will take place after all.

Prosperous but cold 
Meanwhile, somewhat conflicting reports are emerging from Russia regarding the upcoming wheat harvest. Market research firm SovEcon raised its yield forecast for the upcoming wheat harvest from 87,6 million tonnes to 89,7 million tonnes. The market agency is increasing the estimate because the weather is cooperating favorably for Russian grain growers. SovEcon is leaving the estimate for spring wheat unchanged at 23 million tonnes.

The Russian news agency Ria just issued a warning that cold weather is causing delays in the sowing of spring wheat. Sowing later normally has a negative effect on the yield. If we look at the forecast for minimum temperatures, it can be seen that the frost is not over yet. Incidentally, this applies not only to Russia and Scandinavia, but also to the Baltic states and Belarus.

On the other side of the Atlantic in the US, the chance of precipitation has increased somewhat in the fourteen-day weather forecast. For both the southern Corn Belt and a strip below the Mason-Dixon Line, May could start somewhat wetter than average. According to the weather model, the truly dry areas in western Kansas, Oklahoma, and Texas will receive little to no rain.

Farmers on the prairies are, incidentally, quite used to drought. Where harvesting is not practiced, it is historically not unusual to leave a quarter of the wheat unthreshed due to low yields and/or to turn beef cattle indoors during the winter. Historically high prices for slaughter cattle in the US could well be an incentive for farmers to thresh less wheat and reserve a larger portion for the cows.

In Argentina, arable farmers are preparing to sow winter wheat. Just like their counterparts in Australia, significant attention is being paid to the sharply increased fertilizer prices when making choices regarding the cropping plan. According to some sources, slightly less winter wheat is likely to be sown in Argentina. For the wheat that is being sown, it appears that growers are opting for a lower nitrogen application. If this actually happens, it could have significant consequences for the yield.