Analysis Grains
Moderate growing season reflected in EU yield figures
For the average farmer, it's no longer news, but the fact that grain yields are disappointing is now also coming to light in the new Mars bulletin from the JRC. In the root crops, the scientific bureau of the European Commission is not making major adjustments. However, the market continues to be characterized by an ample supply of cheap wheat from the Black Sea region. In the US, the USDA has revised downward the status of corn and soybeans. However, compared to last season, both crops are still doing well.
The September contract for wheat on the Matif closed €5 lower at €189.50 per ton yesterday. On the CBoT, wheat lost 0.8% and closed at $4.98 per bushel. Corn declined even more and closed 1.6% lower at $3.62 per bushel. Unlike the grains, soybeans were on the rise at the Chicago exchange and closed 0.8% higher at $9.59¾ per bushel.
An ample supply of wheat, especially from the Black Sea region, is mentioned by analysts as a key cause for the bearish sentiment in the grain market. Market agency Ikar quoted Russian Black Sea wheat $2 lower at $216 per ton. Russian exports did decrease slightly to 1.16 million tons last week compared to 1.35 million tons the previous week. Wheat was by far the most important product in the export with 980,000 tons, as reported by SovEcon.
Below-average harvest in the EU
The JRC, the scientific bureau of the European Commission, is starting to realize that the growing season in the EU is not going according to plan. In the August edition of the Mars bulletin, the JRC writes that at the EU level, the yield of almost all crops has fallen below the five-year average. The total grain yield has been reduced by 3% to 5.36 tons per hectare compared to the July edition of the Mars bulletin. This is 2% below the five-year average of 5.48 tons per hectare. Drought and heat are causing problems in the central and eastern parts of the European Union. In the north, there is excess moisture which is affecting the crops.
It is noteworthy that the sugar beet harvest is estimated at 73.4 tons per hectare, slightly above the five-year average of 73.1 tons per hectare. The potato yield remains unchanged from the previous edition of the report at 35.1 tons per hectare. If we draw a parallel between the root crops and the grains, a downward correction could still follow when the harvest begins.
Corn and soybeans decline slightly
In the US, corn and soybeans are relatively doing well, as revealed last week by the Pro Farmer Crop Tour. However, the USDA made some adjustments in the new edition of the Crop Progress report. 65% of the corn acreage received a good or excellent rating, down from 67% the previous week. Last year, only 56% had a good or excellent rating. Soybeans also declined slightly, with 67% rated good or excellent compared to 68% the previous week.
American farmers made significant progress in harvesting summer wheat last week. Currently, 51% has been harvested compared to 31% the previous week. The five-year average for this week is 53%. Harvesting of barley is slower; 47% has been harvested compared to 30% the previous week and 61% in the five-year average.
The pressure on corn on the CBoT can be explained by the relatively favorable progress of the growing season. The fact that soybeans are moving up doesn't quite align with that. However, as an oilseed, soybeans are supported by crude oil. Another factor is a possible strike at soybean processors in Argentina. Buyers are turning to the US earlier for delivery security, according to some analysts.
