Analysis Grains
Dry start for winter wheat in the US
That the wheat yields in the EU are disappointing was already known. Yesterday, a new estimate from the IGC further reduced the harvest in the EU. According to the IGC, the total grain consumption on a global scale is higher and exceeds the production in the 2024/25 season. Concerns about drought are increasing in America. The start of the 2025 wheat harvest in the winter wheat regions of the US is much drier than last year. Further south, in Argentina, a lack of water is causing export problems.
The December contract for wheat on the Matif closed €2.75 lower at €215.75 per ton yesterday. Grain prices on the CBoT also closed in the red in the last trading session. Wheat closed 1.8% lower at $5.65½ per bushel. Corn showed a similar movement and ended 1.7% lower at $4.05¾ per bushel. Soybeans showed hardly any price fluctuation. The November contract closed three-quarters of a cent lower at $10.13¾ per bushel.
The International Grains Council (IGC) released a new market report yesterday. Global wheat production has been reduced by 1 million tons to 798 million tons for the 2024/25 season. In the previous season, 795 million tons of wheat were harvested. For the EU, the IGC has lowered the yield compared to the forecast a month ago by 2.4 million to 122.4 million tons. For comparison: in 2023/24, the EU harvested 133.1 million tons of wheat according to the IGC. The forecast for Australian wheat harvest has been increased by 1.7 million tons to 31.8 million tons. Wheat consumption for the 2024/25 season remains unchanged from last month at 803 million tons.
The total grain harvest is estimated by the IGC at 2,315 million tons. This is a record harvest and consistent with the August prediction. Grain consumption has been slightly increased compared to the previous forecast, by 5 million tons to 2,326 million tons. The IGC has made no changes for soybeans. Production is estimated at 419 million tons and consumption at 406 million tons.
Drought is back
In the heart of the American wheat belt, it is dry. The new drought monitor shows that 58% of winter wheat in the US is in an area experiencing a precipitation deficit. This means the start of the new season is much drier than a year ago when 47% of the acreage was in a drought zone. Conditions for corn and soybeans in terms of drought are actually more favorable. 26% of corn and 33% of soybeans are in a drought area compared to 58% and 53% at this time last year. However, it has become significantly drier in the American corn belt compared to last week.
In Argentina, it is also dry. Just as the low water level in the Mississippi River causes problems in the US, Argentina is facing a similar issue in the Parana River. The water level in the Parana is the second lowest since 1970. About 80% of Argentine grain exports go through this river. A major difference from, for example, the Mississippi or the Rhine in Europe is that the main seaport is not located at the mouth of the river. The large ocean vessels have to sail about 250 kilometers up the Parana before reaching the port of Rosario, the center for grain handling in Argentina. Due to the low water level, these ships cannot be fully loaded, making transportation from Argentina a relatively expensive affair.
