Lower oil prices pull grain markets lower

The wheat market was under pressure again, with lower oil prices and larger harvest expectations from Russia setting the tone. At the same time, heat in parts of Europe and drought in the US are creating uncertainty about yields. However, this had little effect on the market. The September wheat contract on the Matif closed yesterday €3.75 lower at €210.50 per tonne. On the exchange in Chicago, wheat lost 13 cents, bringing it to $6.22½ per bushel. Corn also closed lower, but the loss remained limited to 5 cents at $4.52½ per bushel. Soybeans, unlike the grains, moved more sideways and lost ¾ cent to close at $11.85¼ per bushel. The grains market followed the trend on the oil market in the last trading session. Reports about a possible opening of the Strait of Hormuz put pressure on the oil price and dragged the grains market along with it. A truly definitive solution to the war between the US and Iran is not yet expected soon by various experts. The weather reports carried little weight. According to some analysts, there would be reason for that. In Western Europe, in any case, it will remain warm until the weekend. In the Benelux and Germany this gives little cause for concern for grains, but the situation is different for southern France and Spain. Temperatures around 30 degrees are just too much for the wheat there, which is already moving toward ripening. Moisture reserves in Russia Bearish news came from Russia. SovEcon raised the yield forecast for wheat in Russia from 89.7 million tonnes to 90.3 million tonnes. According to the agency, the reason for the increase is the favorable moisture reserve. SovEcon also issued the first forecast for Russia's total grain and pulses harvest for 2026. That comes to 137.4 million tonnes compared with 141.2 million tonnes last year. The Ukrainian Minister of Economic Affairs reported that farmers in Ukraine used less fertilizer this spring. The reason for that is the unrest in the Middle East, where several large fertilizer factories are located. Potentially, the harvest in Ukraine could be lower because growers have cut back on fertilizer. India is meanwhile heading for a record wheat harvest. According to the forecast of the Indian government, the harvest will amount to 120.66 million tonnes. By comparison: last season India threshed 117.95 million tonnes of wheat. Another piece of news from India is that the country has a tender open for 1.5 million tonnes of urea. Always something with the weather In large parts of the central and southern US, drought is a problem. In the latest Crop Progress report, 26% of the wheat gets a good or excellent rating. Last week that was 27%. The current percentage of wheat rated good or excellent at 26% is the lowest percentage since 1986. A year ago this week, 50% of the wheat in the US was rated good or excellent. Rain is forecast for the southeastern US, the area around the Gulf Coast and Tennessee. For grains, that rain is too late according to some local sources. In fact, the crop there is already quite far along in ripening and too much precipitation has a negative effect on quality, some experts warn.