The wheat market is sending out several signals. In Paris, the old crop quote is mainly moving sideways, while the CBoT in Chicago has started the way up. Which indicators dominate the market?
The May wheat contract closed yesterday (4 April) on the Matif at €363,75 per tonne, down €1,50 from before the weekend. The price for the new harvest was on the rise. The September 2023 contract rose by €6,50 to €335,75 per tonne. The May 2023 contract rose even faster, increasing by €7,75 to reach €325 per tonne. On the CBoT, the May contract rose 3% to $1.010 per bushel (approximately €338 per tonne). Contracts for the new crop have also increased on the CBoT, but in smaller steps.
Analysts cite the threat of new sanctions against Russia as one of the reasons for the rising prices. However, that statement is difficult to reconcile with the price movement on the Matif. In addition, the call by the leaders of the National Transport Federation in Argentina for a strike is giving the US a boost. The federation has asked the Argentine government to increase transport rates for grain producers. This is necessary to compensate for higher fuel costs. To limit the economic damage to the transport sector, the federation has called for all work to be halted from Monday, April 11.
A blow to Russian exports
Demand for Russian wheat is weak, reports a JP Morgan analyst at Reuters news agency. At this stage of the season, demand is already somewhat less. It is now difficult to determine whether demand is increased because importers sanction themselves, or whether they only purchase what they immediately need due to high prices, or whether demand is shifted to the new harvest, or whether it is a combination of all these factors.
Russia has criticized the plan to require payments in rubles. Currently this only applies to gas deliveries to Europe, but ultimately this can also be done with other raw materials (oil, grain, metal, fertilizer, coal and wood). According to oligarch Vladimir Lisin, Russia's export position is being undermined, he tells the Russian newspaper Kommersant. "We have been fighting for access to export markets for decades. We have built relationships with thousands of customers in seventy countries. It is difficult to imagine what could convince our buyers to switch to the ruble and the currency risks that come with it. Switch to payments in rubles simply throws us out of the international market.”