The chance of frost damage or a tightening Russian export policy cannot change the wheat quotation in Paris on Monday 20 December. The price of the March contract fell further after an already difficult week.
At 15:30 PM on Monday afternoon, the March contract for wheat on the Matif is trading at around €275 per tonne. A decrease of €3,50 from Friday's closing price. Although there are some positive points for a price increase, the market does not pay much attention to this in the week before Christmas.
Increase in export tax
Even news about the tightening export tax from Russia brings little change. New information shows that at a wheat price of $375 per tonne, an additional tax will be levied. If the price rises to $400, another increase will follow. The Russian government wants to set an export quota of 8 million tons of wheat for the period from mid-February to the end of the current season. Insiders think this is enough to bring the season to a successful end, just barely, so there is no stress.
Speaking of quotas: Argentina has also set them. For the 2021-2022 season, this amounts to 12,5 million tons of wheat and 41,6 million tons of grain maize. Last season, 39,8 million tons of corn and 11,2 million tons of wheat were exported by the country. So no problems are expected with the current parameters. The country is counting on a good harvest of 21 million tons of wheat and 57 million tons of corn. That is 4,5 million tons more corn and 4 million tons more wheat compared to the previous season.
Futures trading prohibited
The reasons for Russia and Argentina are clear: To combat rampant food inflation (read: higher food prices). They continue to skyrocket. This is a growing problem worldwide. It even leads to draconian measures. For example, India has the option of concluding one-year forward contracts forbidden for various major commodities. This includes wheat, soybeans and oil, rapeseed and peas. The country will hold elections early next year and hopes to stabilize the situation in the country with this measure.
New European data shows that French wheat exports in November were the lowest in three years. This is partly due to fewer exports to China. Algeria is the largest non-European buyer of wheat from the country. In total, more than 800.000 tons of wheat were exported and 354.000 tons of barley. China is expected to take over the top position in the export list in December because Algeria has mainly bought wheat elsewhere in their latest tenders.
Fear of cold
The grains in France and elsewhere in Europe have gone into the winter well. The late-sown crops have developed less because it has been relatively cold. France has experienced relatively cold weather in recent weeks, causing some fears that this could damage winter grains. This fear is also present in the Black Sea region. However, this does not cause much unrest on the grain market.