Analysis Grains

Wheat explores upper end of market range

May 29, 2024 - Jurphaas Lugtenburg

A moderate stand of wheat in the Black Sea region continues to provide a solid foundation in the wheat market. New figures from Russia and Ukraine particularly boosted wheat in Chicago. The sentiment in corn and soybeans has been tempered by, among other things, the progress in planting in the US. Despite occasional rainfall, American farmers are steadily progressing with spring work.

The May wheat contract on the Matif closed €4.25 lower at €264.75 per ton yesterday. Wheat on the CBoT was on the rise on the first trading day of the week after a long weekend. The July contract closed 0.4% higher at $7.00¼ per bushel. This marks the first time since early August last year that the psychological $7 threshold has been surpassed for the current contract. Corn took a step back and closed 0.5% lower at $4.62½ per bushel. Soybeans showed a larger decline, closing 1.5% lower at $12.29½ per bushel.

Market bureau Ikar has once again revised its yield expectations downwards. Ikar now expects a wheat harvest in Russia of 81.5 million tons and an export of 44 million tons. A month ago, the bureau projected 93 million tons, of which 52 million would be exported. Drought and frost have caused significant damage to Russian winter wheat.

Ukraine also provided a yield forecast. The Ukrainian grain sector association estimates the upcoming harvest of grains and oilseeds at 74.6 million tons, down from 76.1 million tons in the previous forecast. Last season's harvest was 82.8 million tons. Reasons cited for the lower harvest forecast include a smaller sown area, unfavorable prices, relatively high transportation costs, and drought in the eastern and southern parts of the country this month. In addition to a preview of the upcoming harvest, export figures from Ukraine were also released. The country has exported 45.8 million tons of grain this season through May 27, exceeding last season's export of 44.9 million tons during the same period. This season's export figure includes 17 million tons of wheat, 25.8 million tons of corn, and 2.4 million tons of barley.

Planting in the US Progressing Steadily
Due to Memorial Day, the USDA released the Crop Progress report one day later than usual this week. The report is somewhat bullish for wheat. Of the winter wheat acreage, 48% is rated good or excellent, down from 49% the previous week. Growth is ahead with 77% in the heading stage compared to 69% in the five-year average. Planting of spring wheat is nearly complete, with 88% of the planned acreage sown. The five-year average for this week is 81% planted. Rain is forecasted in the western part of the wheat belt by the end of this week. Analysts suggest that if this precipitation occurs, it could put pressure on wheat prices, especially since the upper limit has been raised in recent months.

For corn and soybeans, the Crop Progress is neutral to bearish. 83% of the planned corn acreage is planted. American growers are ahead of the five-year average of 82% but behind last season when 89% was already sown by this week. Corn growth is on par with the five-year average at 58% above ground. Last year, it was 66% above ground. Of the soybean acreage, 68% is planted compared to 63% in the five-year average. Last year, 78% was planted by this week. 39% of soybeans are blooming, up from 36% in the five-year average and 50% at the same time last season.

Jurphaas Lugtenburg

Jurphaas Lugtenburg is a market specialist in onions, carrots, and commodities such as wheat, corn, and soybeans at DCA Market Intelligence. He combines his degree in business administration with a passion for farming.
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