Analysis Grains
'Rules do not align with market demands'
In Germany, the grain harvest this season is expected to fall below 40 million tons according to the German Farmers' Association. The growing season did not cooperate, and the association also criticized the politics. Due to impractical regulations, it is not possible to produce what the market demands, that's the criticism. The German harvest figures had little effect on the market. Across the board, prices closed in the red.
The September wheat contract on the Matif closed $2.50 lower at $196.75 per ton yesterday. Prices also closed in the red on the CBoT in the last trading session. Wheat lost 1.7% and ended at $5.11 per bushel. Corn closed 1.1% lower at $3.71½ per bushel. Soybeans were the biggest decliner, dropping 2.3% to $9.41¼ per bushel.
The Deutscher Bauernverband (DBV) released new figures yesterday regarding the grain harvest of 2024. The total German grain harvest is estimated at 39.3 million tons, well below the multi-year average. Last season, 42 million tons of grain were harvested. Wheat is by far the most important cereal crop, and German farmers harvested 18.0 million tons this season compared to 21.2 million tons last season. Due to the wet autumn, 330,000 hectares less winter wheat were sown. The extremely wet growing season also resulted in lower yields per hectare.
The total winter barley harvest is estimated by the DBV at 8.9 million tons compared to 9.5 million tons last season. Weather also played a significant role in the lower yields here. For rapeseed, the growing season saw slightly better yields compared to the previous season. The average yield per hectare is 3.38 tons compared to 3.35 tons last year. However, due to a decrease in the acreage, the total rapeseed harvest in Germany is 200,000 tons lower than last season at 3.7 million tons.
'Scrap impractical requirements'
"An extremely wet growing season from autumn to the beginning of summer and again showers during the harvest have posed major challenges for our farmers," writes Joachim Rukwied, president of the DBV in the explanation of the figures. "To ensure yields and quality in the future, obstacles and impractical requirements must be scrapped! It cannot be that baking wheat is demanded but that we farmers can only grow feed wheat due to new regulations, such as those regarding fertilization."
Rukwied is also concerned about the increasing restrictions on crop protection. "The high fungal pressure this season shows how important it is to be able to effectively protect crops. The 'future program' for crop protection does not offer solutions to the challenges we face in agriculture. We urgently need a new policy on crop protection." According to the DBV, sugar beets, corn, and potatoes largely benefited from the wet growing season. However, the high disease pressure combined with the reduced range of products is also a concern here.
According to the DBV, there are no cost-covering prices. Due to the extreme price drop, especially in the grain market, farmers are facing difficulties. Grain cultivation in Germany is no longer economically viable due to high production costs and low prices, according to the association. Rukwied points out numerous political and legal obstacles that hinder German farmers' competitiveness. A program to restore competitiveness is urgently needed according to Rukwied.
Strike
In the US, there is much discussion about a railway strike in Canada. Employees of the two largest railway companies (responsible for 80% of rail freight in Canada) went on strike yesterday after negotiations with the unions broke down. Players in the grain market fear a significant influx of grain from Canada to the US. Analysts differ on how realistic this fear is. The alternative to rail transport is road transport. Opinions vary on whether there are enough trucks available to significantly increase grain transportation across the US border. This is separate from the higher costs associated with it.
