Analysis Grains
European yield map grain turns red
In the series of yield figures (it almost looks like playing quartets), yesterday it was the turn of the European Commission. They also paint a picture that the harvest of 2024 is one to quickly forget as a grower. Looking at the prices on the futures market, you would almost think that everything is fine. However, one of the major buying countries on the world market seems to have different ideas, as revealed by Reuters' investigation.
The September contract for wheat on the Matif closed €3.75 higher at €202.25 per ton yesterday. Prices also rose during the trading session on the CBoT. Wheat was the biggest gainer with 2.1% and reached $5.25 per bushel. Corn increased by 1.8% to $6.75 per bushel. Soybeans followed the grains and closed 1.6% higher at $9.75 per bushel.
The European Commission has revised downward the yield expectation for wheat this season. For the 2024/25 season, the Commission now expects a harvest of 116.1 million tons of soft wheat. In the July forecast, the Commission projected 120.8 million tons. The harvest is therefore 7.5% lower than last season and 8.4% below the five-year average. The total grain harvest is estimated at 264.5 million tons. This is 7.1 million tons less than the previous estimate, and the harvest is thus 5.9% below the five-year average. Only oats stand out with a larger expected harvest. With a forecast of 7.4 million tons, this season's oat yield is 27.1% higher than last season and 3.2% higher than the five-year average. Oats are therefore the only grain type where this season's harvest exceeds the five-year average.
With wheat prices fluctuating around 'normal' despite the modest yields in the EU, one might think that the volatility that took hold in the period after the Russian invasion is definitively behind us. Reuters provides insight into the situation in one of the largest wheat-importing countries: Egypt. President Sisi is not so sure that Egypt has sufficient stock and personally intervened in procurement policy, as shown by Reuters.
Threat
Rising tensions in the Middle East and between major grain-exporting powers Russia and Ukraine, along with wheat prices under pressure, presented the perfect opportunity to build up stocks, according to the Egyptian state buyer Gasc and the Egyptian government. In a July tender, bids were relatively sharp at around $200 per ton. While tenders normally involve quantities of 200,000 to 250,000 tons, Gasc suddenly issued a monster tender of 3.8 million tons in early August. Filling this tender with competitive offers proved unsuccessful. Egypt managed to secure only 7% of the intended volume. Exporters were reluctant to participate in the tender, partly due to payment terms of up to nine months.
