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Inside Grains & Commodities

Seeking wheat market dependent on Russia

23 November 2018 - Anne Jan Doorn

The wheat price on the Matif in Paris rose for the third time in a row last week. Still, the movement was limited, mainly because the market is searching. However, the rising price of wheat from Russia could be a price supporting factor. 

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The wheat quotation on the matif has shown an upward trend in recent days. This is also partly due to concerns about the recently sown winter wheat. In addition, the expected slowdown in Russian exports also supports the listing.

Russia increases export volume
Russia recently reviewed the export volume of wheat for this season and, based on this, this volume has been increased to approximately 35 million tons (previously it was 30 million tons). The difference with last season has shrunk to 5 million tons. 

Although this means more supply, several analysts expect that more than 55% of Russian grain will have been exported by the end of November. This will also make it more likely that Russia will have to reduce volumes in the remainder of this season.

More demand from the Middle East
At the same time, analysts expect rising demand from Turkey. The country is expected to buy 4,5 to 5,5 million tons of wheat from Russia this marketing year. Since July 1, it has already imported 2,2 million tons. There is also a lot of demand for wheat from Russia from Egypt.

The price of Russian wheat is also expected to rise in the near future. This offers prospects in particular for the export of European wheat and for the listing on the Matif. The area of ​​winter grains in Russia (for the 2019 harvest) is expected to increase by more than 5% to approximately 17,6 million hectares.

However, the quotation on the CBoT in Chicago shows a decline and reaches a level of $46 per ton after the peak of week 190 (over $183 per tonne). This is mainly due to disappointing exports. Thanksgiving was also celebrated in the United States this week. The market is struggling with a lack of information, but the poor condition of wheat in Argentina is driving up prices in the short term.

Brief revival for corn
The corn quotation on the Matif (Paris) showed an increase last week to the highest level in 2 months. This was mainly due to slightly lower yield forecasts for the European Union; mainly caused by a 20% lower corn yield in Poland. However, enough cheap imports from Ukraine will likely prevent further price increases.

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