Insight Focus
- Dry weather hitting wheat condition in US, Europe
- Weather perfect for wheat in Russia, Ukraine
- Opening Ukraine’s Black Sea Ports Would Cause Price Correction
Nixal’s Forecast
The average price since the new crop started is running at USD 6.40/bu.
Market Commentary
Grains opened last week rallying on the back of India limiting wheat exports, but corrected during the second half of the week on higher Russian production, erasing all the gains. Corn in Chicago fell the most on impressive progress in US planting.
It was all about the Indian wheat ban last week, with wheat pulling corn higher before correcting.
US Corn Planting Progresses
US corn planting made impressive progress and is now 49% complete compared with 22% last week. This was a quick catch-up and compares with. 78% last year and the five-year average of 67%. Despite being still very much delayed, the huge amount of progress has pressured prices down since last Tuesday.
In Brazil, first corn harvest is 80,1% complete compared with 73.2% at the same point last year.
In the Black Sea region, spring planting in Ukraine continues to make good progress with 83% of the area now planted. Agriculture Minister Mykola Solskyi puts the maintains
the projected area at 14.2m hectares compared with 16.9m planted last year which represents a loss of area of 15%. Corn planting is 76% complete on the planned area in 2021 compared with. 89% last year.
Exports from Ukraine Still Slow
Exports from Ukraine appear to be making progress but there are still some 20m tonnes stored. Most of the exports continue to be carried out by rail, but exports from seaports are increasing. The EU announced a package of measures with the goal to help Ukraine export 20 mill tonnes of agricultural products over the next three months. The US and UN are also trying to help exports from Ukraine through the Lithuanian port of Klaipeda. But for that to happen, the grains need to go through Belarus which is a Russian ally.
On the wheat front, India relaxed its export ban, but just marginally allowing exports of cargoes that were already registered in their customs system. They also allow exports to Egypt which is exempt from the ban. A lot of deals booked before the ban are now stuck, with buyers needing to look elsewhere for their purchases and the market is now expecting the Indian government to further relax the ban.
USDA Raises Russia Forecast
The USDA increased their production forecast for Russia by 5m tonnes which was one of the factors for the correction by the end of last week.
US wheat conditions worsened 2 percentage points to 27% good to excellent vs. 48% last year. In France Wheat conditions worsened another 9 points to 73% good to excellent compared with 79% last year. French wheat’s condition has worsened by a sizable 16 percentage points in just two weeks as dry and hot weather continues to have a negative impact.
Weather Forecasts Mixed
The weather forecast for this week is mixed for the US corn belt with a good combination of rain and sunshine. Brazil is expected to have warm and dry weather in the center west of the country which needs some rain, while in the south some rains is forecast. Rain is forecast in Europe which will help prevent further deterioration of the wheat crop.
Despite the correction last week, the situation for corn and wheat remains tight, especially for wheat. Persistent dry weather also continues to worsen the wheat’s conditions both in Europe and the US. The only place where weather has been perfect is in Russia and Ukraine, but until traffic through the Black Sea is restored, Ukrainian exports will be very limited. If and when this happens it will result in a sharp price correction; but for now, the high price environment is here to stay.
