Australian grain growers fear drought damage

The demand for wheat on the world market has been crazier before. This week’s new export figures also prove that. China is meanwhile also very limited in the corn market. In Australia, concerns about wheat yields are increasing. In the southeast of the country, less than 10 millimeters of rain fell in September. That is also little by Australian standards. With still a major month to go before the harvest, local sources fear that yield expectations will have to be adjusted downward. The December wheat contract on the Matif closed €0.25 higher at €188 per ton yesterday. Wheat also showed a modest increase on the CBoT. There, wheat rose by half a cent to $5.07¼ per bushel. Corn was a bit stronger and rose by 2¼ cents to $4.22 per bushel. The biggest gainer on the Chicago exchange last trading session was soy, which increased by 7½ cents to $10.29½ per bushel. A moderate demand for wheat on the world market remains a recurring theme. This week’s export figures are no exception. The EU's wheat exports are 25% behind last season in the period up to and including October 5. This season, the EU exported 4.96 million tons of wheat compared to 6.63 million tons in the same period last season. Saudi Arabia is the largest customer for European wheat exporters with 638,000 tons. Following that is Morocco with an import of 472,000 tons. A silver lining can also be found in the European export figures; with 2.18 million tons, the export is 42% ahead of last season. At the same time, there is also 30% less corn imported compared to last season. In total, the EU has imported 3.93 million tons of corn so far. Ukraine is also struggling to find customers for wheat. According to the latest figures, Ukraine has exported 4.98 million tons of wheat so far this season compared to 6.8 million tons last season. In total, Ukraine has exported 6.9 million tons of grain against 11.7 million tons last season. In addition to wheat, 963,000 tons of corn and 868,000 tons of barley have been exported. For comparison, around this time last season, 2.8 million tons of corn had been exported. China holds backA significant factor for the moderate Ukrainian grain export is the reduced demand from the EU, according to some analysts. Shortly after the Russian invasion, Ukraine gained easier access to the internal European market, and those measures are now being scaled back. For Ukrainian corn exports, SovEcon describes it as the weakest start to the season since 2020/21. The head of SovEcon, Andrey Sizov, points to the absence of China. Although China has secured substantial volumes of barley from Ukraine, Beijing has hardly been active in the corn market in recent months. In the first 8 months of this calendar year, Russia was the largest supplier of corn to China. With 287,000 tons, Russia exported three times as much corn in the period from January to August this year compared to the same months last season when exports were at 96,000 tons, various media report based on Chinese customs figures. Brazil, with 249,000 tons, is the second-largest supplier of corn to China after Russia. Ukraine comes in third with 231,000 tons valued at about $60 million. The wheat export from Russia is expected to rise to 5.1 million tons in October, according to Rusagrotrans. In September, 4.6 million tons of wheat were exported, but last October the export was 6.1 million tons. To boost exports, the Kremlin has lowered the export duty on wheat by 20%. Dryness in AustraliaIn a large part of the south in Australia, expectations for the grain harvest are somewhat tempered. The country down under seemed to be on track for a very good wheat harvest. In September (a critical month for the growth of wheat in Australia), much less rain fell than normal in the southeastern provinces of Victoria and South Australia. In South Australia, less than 10 millimeters fell, less than half of the long-term average, according to the Australian meteorological institute. About a quarter of Australia's wheat comes from both provinces in the southeast. Now that warmer weather is approaching, the state of wheat in Australia may further deteriorate, according to some local sources. Some weather models predict slightly higher chances of precipitation for Australia by the end of the month. Whether growers will be happy about that is another question. In November, the first fields will be harvested, and rain shortly before or during the harvest is not beneficial for quality.