Will it be the big merchant at the grain market again?

The May wheat contract on the Matif closed €0,25 lower yesterday at €194,50 per ton. The September contract, on which most trading is currently taking place, remained unchanged at €209 per ton. On the Chicago exchange, wheat was on the rise and closed 2,2%, or 13 cents, higher at $6.21 per bushel. Corn closed 5 cents higher at $4.60 per bushel. Soybeans were also in positive territory, rising 13 cents to $11.77 per bushel.

Traders in the US appear to be slightly more sensitive to developments in the Middle East than their counterparts in Europe. Iran has proposed lifting the blockade of the Strait of Hormuz and ending hostilities, according to the American site Axios. Later, Iran is reportedly willing to negotiate regarding the country's nuclear program. US President Trump wants nothing to do with this and believes that negotiations regarding Iran's nuclear program should begin immediately. As a result, Brent crude rose to $108 per barrel yesterday. According to some analysts, the rising energy price dragged grains down in its wake.

American wheat early in the ear
Another factor supporting the US wheat market is the drought plaguing large parts of the US. Nevertheless, the USDA has not changed the condition of winter wheat compared to last week in the new Crop Progress report. 30% of the acreage is in good or excellent condition. In terms of development, winter wheat is ahead of the five-year average. 34% is in ear this season, compared to 21% in the five-year average this week.

Sowing of spring wheat is slightly behind schedule, with 19% sown this week this season compared to 22% in the five-year average. Of the planned spring barley acreage, 34% has been sown compared to 29% in the five-year average.

Drought has not only disadvantages
Growers are making rapid progress with maize sowing. A quarter of the planned acreage has been sown, compared to 22% last season and 19% in the five-year average. What has been sown is also emerging relatively quickly. Specifically, 7% of the maize has been planted, compared to 4% in the five-year average. Soybean sowing is also progressing smoothly, with 23% already sown. By comparison, 17% had been sown by this week last season, and the five-year average stands at 12%. We can cautiously conclude that the dry weather is not bad for the progress of spring work. However, rain is forecast for this week, and work could temporarily come to a standstill, according to various sources.

In Europe, the Joint Research Centre (JRC), the scientific agency of the European Commission, warns of drought in Central and Eastern Europe in this month's Mars Bulletin. While there is still some moisture in the soil, meaning the situation is not yet immediately critical, additional moisture will be needed as the cereals develop further and move towards flowering. Nevertheless, the JRC has raised yield forecasts for several major crops compared to the previous estimate. The average yield of winter wheat is now estimated at 6,05 tonnes per hectare, compared to 5,98 tonnes per hectare in March. Winter barley has been increased by 0,1 tonnes to 5,23 tonnes per hectare. For rapeseed, the estimate has been raised from 3,22 to 3,25 tonnes per hectare.

According to various sources, Saudi Arabia has secured 985.000 tonnes of wheat in a tender. The country aimed for 710.000, but has purchased significantly more. Prices in the tender are said to range from $273 to $285 per ton C&F (free on board). The majority of the wheat for June to August delivery in the tender is reportedly coming from the Black Sea region. A portion will also consist of European wheat. According to sources, sellers from North and South America and Australia have also submitted bids for the tender.

The Egyptian government has started buying wheat from the new harvest from domestic growers. According to the Egyptian Ministry of Agriculture, 363.000 tons of wheat have been purchased since the beginning of this month.

Disapproved
The Netherlands has detained at least two ships carrying soybean meal from Argentina. The reason is that the soybean meal contains traces of genetically modified soybeans not permitted on the European market. This reportedly involves the HB4 gene, which makes the soybeans more tolerant to drought. Incidentally, soybeans containing this gene are permitted in the US and China.