US turns to cheaper European wheat

Once drought has caused damage to a crop, this cannot simply be undone. This is the conclusion some analysts draw about the wheat crop in the southern US. The July contract for Kansas wheat therefore rose to its highest level in nearly two years. Meanwhile, American wheat buyers are turning to the European market. In its new forecast, the IGC has slightly lowered the global wheat crop. The intergovernmental organization also points to the high fertilizer prices, which are now particularly affecting growers in the southern hemisphere.The May contract for wheat on the Matif closed yesterday €2.75 higher at €196.75 per ton. On the CBoT, the rise in wheat was even somewhat stronger, by 11½ cents, or 1.9%, to $6.10¾ per bushel. The July contract for Kansas hard red wheat even closed yesterday at its highest level in 22 months at $6.79¼ per bushel. Corn lagged somewhat behind wheat’s gains with a gain of 1¼ cent to $4.55½ per bushel. Soybeans, unlike the grains, closed lower, down 4¾ cent to $11.59¾ per bushel.Some European traders report that there is interest from the US in wheat from Europe, Reuters, among others, reports. American mills are looking for cheaper alternatives. According to various sources, a Polish trader reports that Poland has sold four ships with 30,000 tons of bread wheat each to mills on the US east coast. The shipments are said to involve wheat from the upcoming harvest.Reuters reports that American wheat in the Gulf of Mexico for immediate delivery is at $250 to $253 per ton FOB (free on board). In the Baltic Sea area, the wheat price is at $238 to $240 per ton FOB.Drought expands The fact that rain is expected at the beginning of next month for a large part of the US had already dampened sentiment earlier this week on the American market. However, the rain front does not reach much of the US wheat belt. Another point frequently made is that even if rain falls, much of the damage has already been done in states such as Kansas and Oklahoma.Meanwhile, the drought in the US continues to expand, according to the new drought monitor of this week. Around 70% of winter wheat is affected by drought. That percentage stood at 68% last week. In the northern prairies, a temperature record was also broken this week. In the afternoon, the mercury rose to 32 degrees Celsius. The International Grains Council (IGC) came out yesterday with a new forecast for the global grain crop. The total grain crop is estimated at 2,414 million tons. That is 3 million tons lower than in the March forecast. The wheat crop estimate has been lowered by 1 million tons to 821 million tons. Wheat consumption has been lowered by 4 million tons from last month to 825 million tons. Source: IGC In its explanation of the figures, the IGC also points to the high fertilizer price. Concerns about the affordability of fertilizer and decisions about its use have contributed to uncertainty about harvest expectations for 2026/27, including in parts of the southern hemisphere, where crop needs may not be fully met.Due to an upward adjustment of grain stocks at the start of the season and a reduction in expected grain consumption, stocks at the end of the 2026/27 season still come out higher than in the IGC's previous forecast. The IGC does note, however, that grain consumption is rising for the fourth consecutive year. Growth in demand for grain for feed and industrial uses is slower than compared with last season.