EU grain harvest nearly 10% smaller due to drought

The attacks by Russia and Ukraine on each other's infrastructure are not without consequences for grain exports from those countries. The European Commission has revised down its estimate for the EU grain harvest. In particular, the maize harvest is now expected to be much smaller than previously forecast, partly due to the drought. It also remains persistently dry in the US wheat belt, according to the latest drought monitor.The September contract for wheat on the Matif closed yesterday €3 higher at €229.50 per tonne. On the CBoT, wheat added 2¾ cents to $6.63½ per bushel. Corn gave up 3¼ cents in the previous trading session and ended at $4.45¾ per bushel. Soybeans moved mostly sideways and closed ¾ cent lower at $11.77¼ per bushel.It remains unsettled in the Black Sea region. Ukraine carried out a drone attack on grain terminals at the port of Taman. According to various media, significant damage was caused to the installations. In addition, Russian tankers have once again come under attack. All in all, more than 200 ships in the Black Sea and the Sea of Azov have now been hit by Ukraine in the last three weeks. According to various sources, Russia has hit three dry bulk carriers near Ukrainian ports. Experts fear that attacks on both sides' grain infrastructure will continue for the time being.The fighting is not going unnoticed by grain exporters in the region. Rusagrotrans has further lowered its export forecast for July to 1.9 million tonnes. For August, Rusagrotrans expects exports between 3 and 3.5 million tonnes. Some analysts believe this estimate is too optimistic given the attacks.Too little water Closer to home there are also logistical problems, but with a very different cause. Due to the drought, river levels are very low, disrupting inland shipping. Some canals are closed to navigation and because of the low water levels vessels cannot be fully loaded because of draft restrictions. With the wheat harvest under way, this is far from ideal for the grain market, according to some experts.The European Commission lowered its forecast for the EU grain harvest yesterday. The wheat harvest is now estimated at 124.4 million tonnes. In June, the Commission was still forecasting a harvest of 126.3 million tonnes. For maize, the European Commission has made a substantial adjustment. In June, it was still forecasting a harvest of 59.9 million tonnes and that has now been reduced a month later to 51.9 million tonnes. Heat and drought, together with a reduction in acreage for several crops, mean that the Commission now estimates total grain production in the EU at 262.8 million tonnes, compared with 273.7 million tonnes in June. If these forecasts prove accurate, the grain harvest will be 4.4% below the five-year average and 9.4% below last season's harvest. Drought monitor In the US, it is quite dry in the western Corn Belt and on the northern prairies. Rain is forecast for the key Corn Belt states of Iowa and Illinois. Further north and to the west, it remains dry and temperatures are also forecast to be above the long-term average. This is not good news for crops in these states.