Wheat and rapeseed start week with a plus

As Russia continues its war in Ukraine - with civilians increasingly being targeted - commodity markets slowed last week. On Friday, the May wheat contract on the Matif was trading at €361,75 per tonne and the CBoT at $389,48 per tonne. On Monday the wheat price is about €7,50 per ton higher for the May, September and December contract. Around 16:30 PM this increased further to a plus of €12,50. The CBoT is also significantly higher.

Oilseed rape remains positive
The exception to the rule is rapeseed. It is becoming increasingly clear that the lack of Ukrainian sunflower oil has a huge effect. Stocks are quickly depleted and new product is not supplied from the east. This ensured that the price of rapeseed on the Matif reached a price of €937,75 per ton on Friday. That's a new record.

On Monday the price increased again. The May contract recorded a plus on Monday afternoon from €35 to €38,50 per tonne (+4,10%). The German organization UFOP for the vegetable oil sector has a report published about the consequences of the disappearance of Ukraine. Not only is the country a major supplier of sunflower oil, it also supplies a lot of rapeseed to the EU.

Rapeseed shortage
Of the 6 million tons of rapeseed that the EU imports, 45% comes from Ukraine (2,7 million tons). Canada's lack of exports has made the country an even more important supplier so far this season. The North American country has so far supplied only 500.000 tonnes of rapeseed compared to 2 million tonnes normally. Australia is another major supplier accounting for 27% of the imported volume this season. Significantly more rapeseed has been sown in the EU, but that is not enough. A lot therefore depends on a good harvest in Canada.

The wheat market is more cautious and is working out different scenarios. The question is not whether, but how much Ukrainian wheat will be missed next season. Estimates vary widely from 10% to 50%. In addition, there is the question of whether Russian wheat is available in sufficient quantities everywhere on the world market. Immediately after the Russian invasion, exports came to a complete standstill. Russian figures now indicate that around 2 million tons of wheat have been exported since the end of February.

Drought in Europe
In Western and Central Europe, the month of March was largely very dry and sunny. The remainder of this month will also be warm and dry. With sufficient moisture reserves after a soaking wet winter, this did not immediately cause any problems, but rain is now desirable. Due to mild conditions last winter, the grains developed well. The yield forecasts therefore remain good. It is still unclear to what extent a larger area of ​​summer grains in the EU will affect the total harvest size because sowing is in full swing. A lack of seed in particular is a bottleneck.

It is also dry in the United States. Especially in the west and southwest. Some of the wheat growing areas will be treated to rain this week, but not everywhere. There is still talk of the weather phenomenon La Niña, which causes drought in South America. In Australia, rain falls quite easily, which is favorable for the sowing of the new season. This is currently being started. Australian arable farmers see good demand for grains and oilseeds (rapeseed) on the global market.

Production is lower
The price of wheat is rising due to the conclusion that wheat production in Ukraine will certainly be lower this year. Possibly considerably lower. The dependence on oilseed rape is even greater and current stocks are declining noticeably. Drought is currently still mentioned as a subordinate clause, but this topic may (partly) dominate the headlines in April if the current weather in Europe continues.

In a separate analysis tomorrow morning (March 22) we will discuss the export opportunities and threats.