Analysis Grains
German yield figures boost wheat price
Figures about the yield of wheat from Germany and Canada and the quality of wheat in France could not be ignored. Both in Paris and Chicago, wheat was on the rise. Corn and soybeans, on the other hand, were a bit weaker in the last trading session. News from China may have played a role there.
The September contract for wheat on the Matif closed yesterday €4.75 higher at €198.50 per ton. Wheat on the CBoT gained 1.2%, reaching $5.14¼ per bushel. Corn and soybeans took a step back in the last trading session. Corn closed 0.5% lower at $3.65¼ per bushel. Soybeans lost 0.9% to $9.58½ per bushel.
Modest yield figures from the EU seem to be influencing the wheat market. The German Ministry of Agriculture estimates the wheat harvest of 2024 at 18.8 million tons. That is 12.7% less than in 2023. The cause of the smaller harvest is the moderate conditions during the growing season, which was mainly characterized by wet periods.
FranceAgriMer released the results on the quality of wheat. Both hectoliter weight and protein content are disappointing. 26% of French wheat has a hectoliter weight of 76 kg/hl or higher. The five-year average stands at 76% that is at or above 76 kg/hl. 74% of the wheat has a protein content of 11% or more, compared to 85% in the five-year average. Only 43% is above 11.5%. The moderate quality of the wheat adds to the disappointing yields. According to the latest estimates, the French harvest would be the smallest since the 1980s.
Canadian wheat harvest smaller than expected
Statistics Canada released a yield estimate for wheat in the country yesterday. The total wheat harvest is estimated at 34.4 million tons. This is above last year's harvest when 32 million tons of wheat were threshed. However, analysts were expecting a harvest of 35.1 million tons. Spring wheat accounts for 25.4 million tons this season, compared to a harvest of 24.8 million last season. The market, however, was expecting a spring wheat harvest of 26.6 million tons.
Russia has increased the export duty on wheat by almost 10%, from 828.40 rubles to 908.50 rubles per ton (approximately €8.14 to €8.93). Russia introduced the duty in 2021 to dampen price fluctuations in the grain market. The money raised from the export duty is used for subsidies to agricultural producers in Russia.
Protectionism
China has asked domestic traders to buy less grain from abroad. This is reported by the Bloomberg news agency based on Chinese sources. Beijing claims that there is more than enough grain available in China and that demand is lower than expected. Due to sufficient supply and lagging demand, prices are under pressure. The People's Republic sees this as a threat to local farmers.
The Chinese economy is growing less than the government would like, and the rise in the average Chinese standard of living is showing signs of slowing down. China has established a framework with guidelines for the import of raw materials. By actively managing purchases, Beijing hopes to mitigate the effects of fluctuations in the global market for local processors and consumers.
