Analysis Grains

Weather extremes threaten grain harvest

June 25, 2024 - Jurphaas Lugtenburg

In our part of the world, it finally seems to be getting dry. That will be a welcome change for grain growers who have been plagued by rain practically throughout the entire growing season. In the Black Sea region, concerns about warm and especially dry weather are increasing. Crops have already taken hits and it's not getting any better. In the US, they are dealing with floods in the north. Further south, the winter wheat harvest is continuing.

The Matif dropped to its lowest point in a month and a half. The September wheat contract on the Matif closed €2.25 lower at €222.25 per ton yesterday. Grains on the CBoT also closed lower. Wheat lost 1.6% and closed at $5.52½ per bushel. Corn moved more sideways and closed 0.3% lower at $4.33½ per bushel. Soybeans recorded a 1.3% increase to $11.75¼ per bushel.

The weather in Europe finally seems to be turning a bit in favor of winter grain growers. Temperatures are rising and, more importantly, we are finally getting a dry period according to weather forecasters. The JRC, the scientific bureau of the European Commission, estimates the European wheat yield at 5.64 tons per hectare in the June edition of the Mars bulletin released yesterday. This is equal to the five-year average but 1% below the May forecast.

Russia continues to play with wheat prices
In Russia, wheat prices remain under pressure. The Ikar price for Russian wheat has been reduced by $3 to $231 per ton. According to SovEcon data, exports last week were 830,000 tons, compared to 800,000 tons the previous week. While grain growers in Western Europe are happy that it finally seems to be drying up, there are concerns in the Black Sea region about the hot and dry weather. In southern Russia, there is little moisture left in the ground, and the predicted warm weather could give the grains the final push. In southern Ukraine, only 20% to 50% of the normal precipitation amount for this period has fallen since May 1. Drought is hindering the growth of winter grains and wreaking havoc on summer grains, which are off to a poor start as a result.

Rapid Progress
In the US, the winter wheat harvest is progressing rapidly, as shown in this week's Crop Progress report. 40% of the acreage was harvested in the week ending on June 23. Last week, it was 27%. The five-year average for this week is 25%, and last year at this time, only 21% had been harvested. The condition of winter wheat has slightly improved. According to the USDA, 52% of the acreage is now rated good or excellent, compared to 49% last week. However, the condition of spring wheat has deteriorated. 71% of the acreage now receives a good or excellent rating, whereas last week it was 76%. Last year at this time, only 50% had a good or excellent rating.

Corn and soybeans have also declined this week. 69% of corn is rated good or excellent by the USDA, down from 72% last week. For soybeans, it is 67% this week compared to 70% last week. The growth of both crops is slightly ahead of last season. 4% of corn is in the tassel stage, up from 3% last season, and 8% of soybeans are blooming, compared to 6% last season.

Extreme rain has caused massive damage in the northern corn belt. Especially in the states of Iowa and North Dakota, river levels have risen, causing them to overflow. The extent of the damage to agriculture in the area is still difficult to assess, but local media reports that some crops have been flooded.

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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