European market
Prices are continuing their correction, closing the gaps opened earlier in the month. The key element remains the weather and the evolution of the models, as this week is relatively sparse in reports. The mercury in Russia is expected to be above seasonal normals over the next few days and could speed up the evaporation of the rainfall forecast. While the market is welcoming the return of rainfall, operators on the ground are adamant that much larger quantities are needed to save a potential that is becoming limited. At the same time, the models are showing excess water in areas where spring wheat predominates. This is naturally putting the brakes on spring wheat sowings, with the window of opportunity gradually closing.
Elsewhere in the world, the focus is still on Western Europe, and France in particular, where the situation is deteriorating by the day. In recent days, the rain has been accompanied by a lack of light, which had a marked impact on the deterioration in potential in 2016. With acreage at a low level following the autumn’s setbacks, the 2024 harvest is gradually moving away from the symbolic 30 Mt mark.
In Argentina, the Buenos Aires Stock Exchange has announced a delay in wheat sowings, with 10% of the area sown compared with an average of 20% at that date. Production for 24/25 is forecast by the USDA at 17 Mt, slightly higher than the 15,91 Mt produced this year.
Having breached the €500/t mark last week, rapeseed is continuing its correction in the absence of any new information. The weather is also a key factor, with sowing continuing in Canada and Australia, where conditions are improving slightly.
On the trade front, the European Council yesterday adopted new customs tariffs on cereals imported from Russia and Belarus in order to halt the import flow from these countries.
American market
The $7.40/b area for US wheat acted as a stopper, leading to a correction and a return close to the symbolic $7/b threshold for September. It has to be said that the advance was rapid and that the markets need a breather. To climb further, wheat will need to be fed daily with new elements, and for the time being, it is the weather that is the sole catalyst. The few rains announced over southern Russia have been welcomed by financial operators, putting an end to almost daily buying over the past few weeks.
While corn has followed the correction, doubts are being cast on producers’ ability to finish sowing quickly. This is because a large part of the Corn Belt is experiencing heavy rainfall, which is dampening the enthusiasm of recent weeks. At the same time, all eyes are on neighbouring Mexico, which is experiencing one of its worst droughts. While the USDA is forecasting production of 25 Mt, beware of what happens next, which for the time being is leading to a growing need for imports. Naturally, this is good news for the Americans, who are maintaining a good momentum towards this destination.