Analysis Grains

Exporters are quickly emptying the wheat silos

June 26, 2024 - Jurphaas Lugtenburg

The grain market continues to struggle. Egypt has secured 470,000 tons of wheat at sharp prices in a tender. Exporters seem eager to quickly empty the silos before the new harvest arrives. Wheat in the US is under pressure due to the supply peak around the harvest. The floods in the northern Midwest have had little impact on the grain market so far.

The September wheat contract on Matif closed $1.25 lower at €221 per ton yesterday. It was also a sea of red figures on the CBoT during the last trading session. Wheat closed 1.9% lower at $5.41¾ per bushel. Corn showed a similar movement, dropping by 1.8%. The closing price of corn was $4.25½ per bushel. Soybeans experienced a more modest decline, closing 1% lower at $11.63¼ per bushel.

The Egyptian state buyer Gasc secured 470,000 tons of wheat in a tender yesterday. Prices range from $227 to $230 per ton FOB (delivered on the ship). 180,000 tons of wheat are from Russia, 180,000 from Romania, 60,000 tons from Ukraine, and 50,000 tons from Bulgaria. Russian exporters seem to pay little attention to the minimum export prices mentioned by the Kremlin. The cheapest bidder was a Russian exporter offering 60,000 tons for $227 per ton. They probably want to quickly empty the silos before the new harvest arrives.

Finally warm and dry weather
Europe is experiencing warm and dry weather. In our country, as well as in France, Germany, and the UK, a warmer dry period is more than welcome. In Eastern Europe and the Balkans, grain growers are less happy with this weather. In Romania, the weather forecasts indicate no change in the next two weeks. This is particularly unfavorable for corn. Romania is the second largest corn producer in the EU.

In the US, favorable growing weather is expected in the corn belt. While temperatures may be above average, rain is also forecasted. The floods in the northern Midwest have little impact on the market. Analysts attribute this to the difficulty in assessing the extent of crop damage in the area. Some draw parallels with 1993 when floods at the end of spring and the beginning of summer wreaked havoc in the Midwest. A rally was largely absent then as well. It wasn't until September, when the extent of the damage was clear, that the market rallied.

The extreme heat in the US seems to be confined to the southern prairies where the wheat harvest is in full swing. By the end of last week, 40% of the winter wheat had been harvested according to the USDA. Analysts expect that about half will be threshed this week. Some specialists anticipate a slowdown in pace once the harvest in Kansas is completed. The supply peak around the harvest will also diminish.

According to some analysts, the pressure on the grain market is partly caused by speculators betting on further declines in grain prices. It is still too early to comment on the yields for corn and soybeans, but for wheat in the US, there is a case to be made. There are significant yield differences between regions, but on average, harvesting is better than previously expected. Some specialists are already anticipating an upward adjustment in the US wheat harvest in the July Wasde report.

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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