'Government intervention won't fix structural problems'

The geopolitical developments in the Middle East have also impacted the European grain market. The margins in the agricultural sector were already under considerable pressure, and the war in Iran does not make the situation any better, warns the German DRV. FranceAgriMer notes that the export of wheat to countries outside the EU is progressing slowly due to strong competition. The May contract for wheat on the Matif closed yesterday €2 higher at €206 per tonne. The March contract on the CBoT remains open and closed $3¾ cents higher at $5.88½ per bushel. Maize rose 8 cents to $4.44¼ per bushel. Soybeans closed 13¼ higher at $12.00½ per bushel. The grain market remains quite nervous. FranceAgriMer lowered the export forecast for French wheat to countries outside the EU by 100,000 tons compared to February, down to 7.1 million tonnes. This is the fourth consecutive month that the French government agency has adjusted the export forecast downward. France is facing strong competition in the world market, notes FranceAgriMer. Among other things, the record wheat harvest in Argentina puts pressure on the market. For exports within the EU, FranceAgriMer slightly increased the forecast by 10,000 tonnes to 7.57 million tonnes. In the 2024/25 season, 6.81 million tonnes of French wheat were exported within the EU. The ending stock of wheat for the current season has been increased from 3.05 million tonnes to 3.39 million tonnes. If the prediction is correct, France would end this season with the largest ending stock of wheat since the 2009/10 season when the ending stock was 3.43 million tonnes. The ending stock of wheat is approximately 37% larger than last season. Germany expects less wheatThe German winter wheat harvest for 2026 is expected to be 7.7% smaller than in 2025. This is at least the prediction of the German cooperative association DRV today in the first harvest forecast for the new season. The winter wheat harvest this season is projected to be 20.8 million tonnes compared to 22.6 million tonnes last season. The total wheat harvest, including spring wheat and durum, is expected by DRV to be 3.8% lower than last season at 22.3 million tonnes. The total grain harvest in Germany is estimated this season at 43.7 million tonnes compared to 45.3 million tonnes last season. The rapeseed harvest is projected to slightly exceed the multi-year average in the upcoming harvest with 4.1 million tonnes. In the commentary on the figures, DRV also addresses the unrest in the Middle East. Farmers are under significant economic pressure due to low prices for their products, high energy and fertilizer costs, and increasing geopolitical risks. The war in the Middle East further aggravates the tense situation, writes DRV's Guido Seedler, a grain expert. Traditionally, a relatively large amount of German wheat is exported to the Middle East. Due to the war in Iran and the region, transportation in that direction becomes more difficult. At the same time, diesel and fertilizer prices are rising. A shortage of fertilizer is not an immediate concern in Germany, according to Seedler. The first fertilization is already largely done on the crops. Futures marketDRV is critical of taxes and levies on energy under the current circumstances. The CO2 tax could, in this context, be suspended or reduced temporarily. The association also calls for a critical examination of taxes on energy. Furthermore, the association urges strengthening exports to countries outside the EU and professional risk management, for example in futures markets. We should think not only of the sale of grain and rapeseed but also of the procurement of fertilizers and fuel. Government intervention in the market should not take place under any circumstances: Experience shows that interventions or guaranteed prices do not solve structural problems but instead cause high subsequent costs, emphasizes Seedler.