Half of American wheat is suffering from drought

The weather remains a major factor in the grain market. In our regions, the extremes are manageable. In the US, half of the wheat is affected by drought. Due to drought, low humidity, and strong winds, the risk of wildfires is high, warns the US weather service. In India, there are warnings for extreme heat. In March, temperatures up to 7 degrees above normal are predicted. The March contract for wheat on the Matif closed yesterday €0.25 higher at €193.25 per tonne. On the CBoT, wheat was on the rise and closed 6 cents higher at $5.71¾ per bushel. In corn, the increase was somewhat more modest with a rise of 2¾ cents to $4.33¼ per bushel. Soybeans, in contrast to grains, lost some ground on the Chicago market and closed ½ cent lower at $11.47¾ per bushel. Ukraine continues to face export problems for grain via the Black Sea. Nevertheless, the Ukrainian national railway company Ukrzaliznytsia has transported about 2 million tonnes of grain to the ports on the Black Sea so far this month, the company wrote yesterday. This is a 2% increase compared to January, but grain transport is 1.4% behind compared to February 2025 over the same period. This year we are facing challenges from attacks on (railway) infrastructure and electric substations that we did not face or faced much less last year, the railway company is quoted by Reuters. Due to Russian attacks on Ukrainian ports and infrastructure, export capacity has been reduced by up to 30% compared to before the start of the war four years ago, Reuters writes. In addition, freight costs have risen sharply due to the attacks. Ukrainian companies are struggling with these extra costs and are forced to cut margins to remain competitive in international markets. Frequent power outages due to Russian attacks exacerbate this situation. Drought In the US, drought is supporting the wheat market. Half of the American winter wheat is in an area where drought is a problem, as the latest drought monitor shows. Last week, that percentage was still at 46%, and last year this week, 22% of the wheat area was affected by drought. The largest winter wheat state, Kansas, has so far managed to escape the worst of the drought. Rain is predicted for the southern prairies. If that actually falls, it would be timely for the wheat coming out of winter. For the states of Nebraska and Wyoming, the situation is more concerning. Due to the combination of strong winds and a relative humidity of around 10%, the American meteorological service has issued a wildfire warning. India was on track for a very good grain harvest. However, the extreme heat forecast for March could throw a wrench in the works. The maximum and minimum temperatures in the northern and northwestern states are likely to be significantly above average in March, according to a staff member of the Indian meteorological service at Reuters. The maximum temperatures in March in the provinces of Punjab, Haryana, Rajasthan, Uttar Pradesh, and parts of Madhya Pradesh are expected to be up to 7 degrees Celsius above normal. By the end of the month, the mercury could reach 40 degrees. The winter wheat and canola sown in October will almost certainly face heat stress. Indian growers planted a record area of wheat and canola last fall. Biofuel The soybean market remains nervous. In April, there is a meeting between Trump and Xi. Various media report that the preparations for this summit are not going smoothly. The planning has encountered bumps, and the coordination leaves much to be desired, it is portrayed. Traders see this as a sign that no decisions will be made during the meeting between the leaders of both world powers. Trump's plans for biofuels provided support in corn and soybean (oil). Small refineries in the US may receive an exemption from the blending mandate for biofuels in fossil fuels. Various US media report that Trump wants half of those obligations that the exemption applies to taken over by large refineries. The oil industry opposes this, stating that the blending mandate increases costs for oil companies. The additional blending mandate could lead to increased demand for soybean oil and ethanol made from corn.