The differences between the grain market in Europe and the US show a completely different picture. Then there is also Russia, which is heading for a good harvest just like North America. Now that the European wheat harvest is in its final phase, it is clear that it is a big disappointment especially in Western Europe.
More and more harvest figures are coming in with a wheat harvest that is mostly within the Western European countries. The leading French market agency Stratégie Grains estimates the EU-27 wheat yield at 116.5 million tons. A decrease of 5.8 million tons from their previous estimate and the smallest harvest since 2018. At that time, 114.8 million tons were threshed. In 2020, also a disappointing year, 118.1 million tons were harvested.
French and German wheat
The French Agreste lowered the harvest by 3.3 million tons to 26.3 million tons. The lowest volume since 1987. 48% of the wheat is now rated as good to excellent. Almost 90% of all wheat has now been harvested in the country and three-quarters of the summer barley. In Germany, the statistics office reported 19.7 million tons of wheat. A decrease of 8% from last year, when 21.5 million tons were harvested.
Also in our country, it is now clear to arable farmers that the grain harvest of 2024 is a big disappointment. 6 to 7 tons per hectare is normal for this year, partly due to disappointing hectolitre weights. Also remarkable is that the summer wheat harvested so far sometimes performs even better with yields of up to 9 tons per hectare. They have just missed the darkest and wettest weather and have not been affected by a wet winter.
Unprofitable
The market prices in our country remain fairly stable and rose slightly in week 32. A price level fluctuating around €200 per ton does not compensate for the low yield. Even with a reasonable straw price and perhaps some manure money added, grain cultivation is simply unprofitable for the arable farmer this year.
Warm and dry summer weather has allowed the grain harvest to proceed smoothly. Especially in the Netherlands, it can be said that the harvest has gone well. In France and Germany, showers have caused more trouble. The weather has not had a significant impact on the corn harvest yet. Stratégie Grains estimates the corn yield in the EU-27 at 60 million tons. This is slightly less than last year's harvest, partly due to a smaller area. It is mainly the heat in Eastern Europe that is affecting the yield there.
The European prices for wheat and corn in Paris are still probing the bottom. For wheat, it is around €215 per ton. Also on Monday afternoon, August 12, trading is taking place at that level. Corn is still hovering just above €200 per ton with a price around €203.50. For wheat, the pressure of cheaper Russian wheat plays a role. For corn, it is the large American harvest that keeps the price level under control.
Record short positions
A good harvest for corn and soybeans is what American farmers are heading towards. This results in a clear bearish market in the US. According to Bloomberg data, there are record short positions in twenty different commodities, including grains and soybeans. In addition to a large harvest, a strong dollar, less demand from China, and the situation in the financial markets play a role.
The Wasde report for August will be released at six o'clock Dutch time today. Analysts expect that the US Department of Agriculture will make some adjustments to the corn acreage. In July, the market was surprised by inventory figures and an acreage that turned out to be 600,000 hectares larger than previously described. It is possible that this increase will now be countered. Especially because some corn has been lost in the northwest of the Corn Belt due to heavy rainfall. For the first time this season, the USDA is also including data provided by farmers themselves.
Export disappoints
For soybeans, the story last month was similar, although the acreage increased less. The US is heading for the best harvest since 2020. It is possible that the USDA will further increase the yields. The export of soybeans to China continues to be sluggish. The USDA previously expected a 7% increase in exports in the coming season, but it remains to be seen if they can stick to that.
For wheat, exports are exceeding expectations. No major changes are expected in Wasde this time for this crop. It is possible that the acreage of summer wheat will be slightly adjusted upwards. News for wheat may come more from the Russian side. The USDA currently expects 83 million tons of wheat from this country. Hot weather has had an impact, but not all market agencies agree. Therefore, it is interesting to see which direction the Americans will take.
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