US drought tightens grip on wheat market

It will still be some time before the combines can go out again. On the futures market, you can see that the weather is increasingly shaping sentiment. In the US it is dry, and in the short term there is no change for the western half of the wheat belt. How different it is here. To get the onions and beets above ground, the irrigation reels are running. For winter wheat, there is not much going on yet. That is the case in more places in Europe. LSEG is therefore raising the forecast for the wheat harvest in the EU. The May contract for wheat on the Matif closed unchanged yesterday at €194 per ton. The first contract for the new crop, the September contract, gained €1.25 to €205.75 per ton. On the CBoT, wheat is getting close to $6 again and rose 4¾ cent to $5.98½ per bushel. Corn gave up 2¾ cent to 4.48½ per bushel. Soybeans also closed in the red, down 3¼ cent to $11.63¾ per bushel. The weather, and especially the drought on the prairies in the central United States, was the main market driver in the wheat market during the last trading session. The July contract for wheat on the Kansas futures market even closed 17¼ cent higher at $6.55 per bushel, the highest level in thirteen months. If we look at the map of the latest drought monitor, it is understandable that wheat in Kansas in particular made a jump. Most wheat is grown in the western half of that state, and it was precisely the west that missed out on the rain from last weekend. Last autumn, 62% of the winter wheat in Kansas was rated good or excellent by the USDA. In the Crop Progress report from earlier this week, that has fallen to 32%. South of Kansas, in Oklahoma, another major wheat state, it is also dry, as well as in Nebraska and the Pacific Northwest. The USDA could therefore well be forced to revise downward its yield estimates for the wheat harvest. The prospect of a smaller harvest carries more weight for the market than the somewhat disappointing US weekly export figure. Net sales of 100,000 tons in the first week of April, the latest USDA figure, are 39% lower than a week earlier. For the full season, the US has already exported 99.5% of the USDA estimate. For the remainder of the season, a weekly export of 6,000 tons is enough to meet the USDA forecast. There is demand for wheat on the world market, though. Algeria has secured 400,000 durum wheat in a tender, according to various sources. Prices in the tender range from $322 to $334 per ton C&F. Algeria's previous large purchase of durum wheat was in December, when about $315 per ton was paid. Good wheat year so far LSEG has raised the estimate for the wheat harvest in the EU plus the UK by 0.5% to 147.9 million. The harvest of soft wheat in the EU is estimated at 127.4 million tons. The fact that the harvest forecast has been adjusted slightly upward is due to the relatively favourable weather, LSEG წერს. As a result, wheat in Germany, France and Bulgaria is looking slightly better than in the previous forecast. Temperatures were on average around or slightly above the long-term average, but rainfall came in below average. In some parts of central Europe there is little moisture left in the soil. Growth there needs to be closely monitored, according to LSEG. In France, wheat is looking good. In the latest update from FranceAgriMer, 84% of the acreage receives a good or excellent rating, compared with 75% at this time last year. The maize acreage in France is 10% to 15% lower. That is at least what the French maize growers' association AGPM and the research institute Arvalis predict. Part of the decline is due to a larger area of winter grain that was sown because of the relatively favourable weather last autumn. The biggest blow to maize, however, is the expensive fertiliser that growers are facing because of the war in Iran. Sunflowers are the main alternative to maize. There are also signs that part of the land will remain fallow. High production costs and lagging grain prices are causing strong financial pressure on growers. Leaving some extra land fallow in combination with a subsidy scheme may be the most economically responsible option according to some experts.