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Analysis Grains

Import leads to ample European wheat stock

May 31, 2024 - Jurphaas Lugtenburg

It took a while, but then you have something. After technical issues, export figures from the EU finally came out. And the bosses in Brussels have not been idle because a sanction package was also presented against Russia and Belarus, and a new harvest estimate was made. Grain growers in the south of Russia could use a shower. Their colleagues on the southern prairies in the US are also suffering from drought, but are not waiting for rain.

The September wheat contract on the Matif closed €4.75 lower at €258.50 per ton yesterday. Wheat on the CBoT also took a step back and closed 1.7% lower at $6.81 per bushel. Corn showed a similar movement and lost 1.4% to reach $4.48¾ per bushel. Soybeans moved more sideways and lost 0.4%, bringing the closing price to $12.09¾ per bushel.

The European Commission came out with a new yield forecast yesterday. The wheat harvest is estimated at 120.2 million tons, which is the same as the previous prediction. The harvest would thus be 4% smaller than last season and the smallest since 2020/21. The European ending stock of wheat for the 2024/25 season is revised upwards from 12.2 to 13.5 million tons. This is due to a larger than expected ending stock this season of 21.4 instead of 20.4 million tons, which is a result of increased imports.

Technical malfunction
It's almost scary, but the Commission came out with updated export figures for the first time since May 3. Due to technical issues, we had to go three weeks without the normally weekly figures. The total wheat import this season is 8.7 million compared to 8.4 million tons in the same period last season. Ukraine accounts for over 70% of all wheat imports to the EU with 6.2 million tons. European wheat exports are lagging behind compared to last season. In 2023/24, 27.8 million tons were exported compared to 29.0 million tons last season.

There was more news from Europe. The Commission presented a new sanction package against Russia and Belarus. A tariff will be imposed on grains, oilseeds, and derived products such as scrap and flour from July 1. A ban on grain imports is a departure from previous sanction packages, where food was always excluded. Food was never to become a weapon in the war, was the principle. The EU's measures seem somewhat symbolic. This season, the EU imported 340,000 tons of wheat, while the USDA estimated Russian exports at 53.5 million tons.

Weather remains one of the most important factors affecting the grain market sentiment. It is dry in the Black Sea region. According to weather forecasts, this will change in the coming days. This would be just in time for the winter wheat in the region, which is already well advanced in the growth stage. The new drought monitor also shows dry conditions on the southern prairies in the US. Weather forecasters expect scattered showers here. Whether this will help the winter grains is doubted by various local sources. Combines are already running in southern Texas, moving north almost daily. Wheat in northern Texas and eastern Kansas and Oklahoma is almost ripe. Rain at such an advanced stage can do more harm than good, from decreasing hectoliter weights to increasing chances of mold formation.

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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