Drought affects the wheat market more than cold

The winter weather in parts of Europe has a limited effect on the wheat market. This is not entirely illogical. It is indeed cold, but for the real cold that causes damage to wheat, we need to look to the edges of Europe. Drought in the US makes trading in the US more nervous, although the wheat situation is not bad. China has found the US quite appealing when it comes to soybeans. Brazil, the main competitor of the US, is not worried about that at all. The March contract for wheat on the Matif closed yesterday €2.50 higher at €191.50 per tonne. At the CBoT, wheat also closed in the green with an increase of 7½ cents to $5.18 per bushel. In corn, the increase was more limited with 2¾ cents to $4.46¾ per bushel. The biggest gainer on the Chicago exchange during the last trading session was soybeans with a rise of 10¾ cents to $10.52¾ per bushel. In the US, there are concerns about the condition of winter wheat. In large parts of the prairies, it is dry, and weather models predict that this drought will likely continue until spring. The USDA gives 60% of the winter wheat in Kansas (the largest wheat state) a rating of good or excellent. This was 62% in the previous update in November. Thus, the winter wheat in Kansas is in a better position than in January last year when 47% of the area received a rating of good or excellent. The condition of wheat has also slightly declined in the states of Colorado, Nebraska, Texas, and Oklahoma. Approximately 40% of the winter wheat in the US is located in a drought area. The cold is not too badIn Europe, it is not drought but cold that concerns analysts. The snow we had in the Netherlands, as well as in the surrounding countries, mainly caused traffic disruptions. After a short spell of milder weather, the colder weather is returning to our regions, but this does not cause much turmoil in the grain market. Temperatures in Europe are not dropping to levels where winter kill of wheat is a real risk. The real cold is still largely confined to Russia and Scandinavia. By the way, there have been no reports from Russia indicating widespread frost damage to wheat there. Chinese purchases of American soybeans provided support to the market. Although no new exports have been published by the USDA, some sources suspect that China has secured a few shipments of soybeans in the US. The total exports from the US, according to sources, are around or above 10 million tonnes. Brazil is likely to export 10 million tonnes less soybeans to China in 2026. This is at least what the Brazilian association of grain traders Anec expects. According to the group, the reduced export is a direct result of the Chinese demand for soybeans from the US. A portion of the Brazilian soybeans that will not go to China is likely to go to other traditional buyers in Asia and Europe, including Spain, Thailand, Turkey, and Iran.