Drought still does not really gain a hold on the grain market

The dry weather in the EU is having only a limited effect on the grain market. Something is really going on. Expana has lowered its forecast for the European wheat harvest. In corn, the drought is really taking hold according to the market bureau. The supply of grain from the Black Sea region remains another uncertain factor that the market is paying a little less attention to. Prices in the physical market are however on the rise, as the results of a tender from Algeria show. The September wheat contract closed yesterday €2.75 lower at €219.75 per tonne. On the CBoT, wheat lost 11 cents and ended at $6.31¼ per bushel. Corn did close in the green, rising 2¼ cents to $4.39 per bushel. Soybeans closed 5¾ higher at $11.57¼ per bushel. The warm and dry weather in Europe does not seem to be really affecting the grain market. Market bureau Expana has lowered its harvest forecast for soft wheat in the EU by 1.5 million tonnes to 126.8. The forecast for the corn harvest has even been lowered by 4.6 million tonnes to 49.1 million tonnes. If that is realized, the European corn harvest will be almost 14% smaller than last season. In virtually all major corn growing areas in Europe, there are some issues. Only for Romania and Bulgaria does Expana expect normal or good yields. In the US, concerns about drought in the important spring wheat regions are also increasing. 58% of spring wheat in the US is affected by drought, according to the new drought monitor. A month ago that was 19%. For corn and soybeans, the drought problems are less dramatic, with 28% and 26% of the acreage respectively dealing with drought. The availability of wheat from the Black Sea region is and remains another major uncertain factor in the grain market. Several sources report that wheat prices in Russia and Ukraine are under heavy pressure due to logistical problems. However, that lower price is not enough to offset the increased freight and insurance costs, if ships are available at all. A Russian missile has this week caused damage to a ship loaded with Ukrainian grain. Such risks make shipping companies very cautious about sending ships in that direction. Ukraine would like to shift the export route for grain to the Romanian port of Constanta. Due to problems with the export of grain from Russia and Ukraine, it would be logical for major importing countries to buy more grain from the EU. Due to decent harvests in importing countries such as Morocco and Turkey, concerns about direct shortages caused by disruptions to logistics chains are fading somewhat. Tender Algeria closed a tender this week in which 540,000 to 720,000 tonnes of wheat were sought. According to various sources, Algeria ultimately secured 720,000 tonnes for prices between $289 and $290 per tonne C&F. Most of the wheat in the tender reportedly comes from Romania and Bulgaria. According to sources, Russia submitted a very competitive price in the tender, but buyers would not be convinced that this wheat can actually be delivered with the recent attacks on the Black Sea and the Sea of Azov. Prices in this tender are by the way considerably higher than in the previous one in June. Then Algeria paid up to $265 per tonne C&F in a tender in which 800,000 tonnes were secured.