Ukrainian grain exposed to winter cold

On Monday, January 16, the Ukrainian agriculture minister announced that the vast agricultural areas of the country will be shrouded in snow. There is no question of damage to cereals. In practice, however, different sounds are heard.

Photos from southern Ukraine show that the thaw has almost completely disappeared the snow cover. It concerns the regions of Odessa, Mykolaiv and Dnipro, writes agronomist and Eastern Europe specialist Mike Lee. Looking at satellite images, it can be concluded that this is an area of ​​at least 4,5 million hectares where there is no longer any snow.

The Ukrainian weather service does not have any snow in the offing for the next ten days. The temperature at night is -12 degrees Celsius. That is a dangerous limit for grains, because then damage to the crops can occur. The risk is at the very least significantly higher.

Since the USDA's latest Wasde report, the wheat futures market in Chicago has gone into mild jubilation. Figures showing US farmers sown the lowest wheat acreage in 108 years sparked a small rally in the stock market. However, analysts warn that not everything should be hung on this. It is a positive point for those who benefit from a rising grain price, but it is not a game changer.

The news about the acreage forecast in the US is countered by skyrocketing inventory figures. A wheat stock of 1,19 billion tons is the highest level in almost thirty years. Taking into account a fifteen percent loss in wheat production – the average in the US – a total of 2017 million tons less wheat can be expected at the well for the 4,1 harvest. In terms of the total volume, we are talking about a drop on a glowing plate.

American farmers have mainly cut red durum wheat, which yields less per hectare on average. In addition, some compensation can also be made in the area of ​​spring wheat. During these decades, the acreage of spring wheat has done the opposite of the acreage of winter wheat twelve times. The same acreage trend was noticeable in spring wheat only in five years.

With above-average wheat production in the US for the 2017-2018 season, it is too early to rely on a price rally based purely on acreage. However, it is a step in the right direction for price increases.

After a minimal increase in week 1 on the Matif, to 171,25 euros per tonne, the quotation stabilized again in week 2 and at the start of week 3 to 169,50 euros per tonne. On the CBoT, the course is somewhat more erratic. Halfway through week 2, there is a clear increase, to more than USD 156 at the end of last week. However, on the first trading day of week 3, in the US, the CBoT is back in the red.

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