Analysis Grains

Wheat gains momentum to rise

May 22, 2024 - By our team of market reporters

The Black Sea region remains the driving force in the wheat market. Ikar came out yesterday with a new harvest forecast for wheat in Russia. The Chicago market was particularly sensitive to this news. Quite remarkable because winter wheat in America is not even in bad shape. Is this a sign that there is more to come?

The September wheat contract on Matif closed yesterday €0.50 higher at €257 per ton. Wheat on the CBoT rose by 1.3%, reaching $6.97½ per bushel. Corn and soybeans took a step back in the last trading session. Corn closed 0.5% lower at $4.58 per bushel, and soybeans lost 0.9%, ending at $12.36¼ per bushel.

Less favorable weather forecasts for grain growers in the Black Sea region are a significant reason for the price increase, especially in the American wheat market. Following the frost damage earlier this month, drought is now a concern for market players. Market agency Ikar lowered the wheat yield forecast for Russia by 2.5 million tons to 83.5 million tons in the new forecast. Ikar expects Russia to export 45 million tons of wheat in the 2024/25 season. This was 47 million tons in the previous forecast.

The path to the top clear?
The fact that the American wheat trade reacts quite strongly to news from Russia is a sign according to some analysts. With 49% of winter wheat in the US rated good or excellent in the latest Crop Progress report - the best condition since 2020 - and a good yield potential in the Kansas Wheat Tour, the outlook for wheat in the US is not bad at all. The fact that these price-depressing developments have little impact on the market paves the way for further increases on the CBoT, according to some analysts.

Jordan had a tender open for 120,000 tons of wheat flour. However, the country did not accept any bids. Sources report that Jordan finds the prices too high. Tunisia has a tender open for 100,000 tons of wheat for delivery in June. Analysts are curious whether the country will follow Jordan's example.

Severe weather
Corn and soybeans were under pressure due to the progress of planting in the US in the Crop Progress report. Many analysts are not convinced that American farmers will reach the planned corn acreage. About 30% of the corn still needs to be planted. However, there is severe weather in parts of the cornbelt. Tornadoes caused havoc in Iowa yesterday, and more rain is forecasted. Planting machines will likely have to stay indoors until early next week. After that, it will be too late to plant corn.

In Rio Grande do Sul, the southern province in Brazil, they are still assessing the damage from the floods. Nearly 13,000 pigs and 330,000 poultry have drowned, grain and soybeans have been lost, and the logistical chains are severely disrupted. As if that's not enough, more rain is on the way. Local sources warn of new floods in the area and fear even more damage.

akkerbouw graanoogst tarweoogst rusland tarwe - agri

Analysis Grains

Drought in Black Sea region affects yield potential

tarweoogst tarwe - agri tarwe

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Wheat price hits bottom and bounces back

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Grain harvest in Western Europe slowly begins

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Exporters are quickly emptying the wheat silos