The limited availability of grain lays a firm foundation in the market. Traders and speculators are more or less used to this. The low yield estimates for the Ukrainian harvest were therefore not a shock. As the growing season continues in the Northern Hemisphere and yield expectations become more accurate, the focus is shifting. According to analysts, this could lead to significant surprises.
The wheat quotation on the Matif mainly moves sideways. The May contract closed €0,50 lower yesterday at €364 per tonne. The contracts for the new harvest are still cautiously on the rise. The September contract increased €1 to €343,25 per tonne. The May 2023 contract is €332,25 higher at €2,25 per tonne than the day before. On the CBoT, the May wheat contract closed 0,7% lower in the last trading session.
The development of the war in Ukraine remains a major uncertain factor for players in the grain market. Additional sanctions are in the air, but Western countries have still not made a decision. Kazakhstan announced it would impose a limit on the export of wheat and flour. The limit will be introduced within two weeks and last until June 15. During that period, a maximum of 1 million tons of wheat and 300.000 tons of flour can be exported.
The consequences of war last for at least a year
However, the consequences of the conflict in Ukraine are not limited to the current export season. The wheat harvest in Ukraine is estimated at 2022 million tons for the 2023/19,8 export season by market agency UkrAgroConsult. A year earlier that was 32,08 million tons. Tunisia wants to become less dependent on grain imports and improve food security by increasing production by local farmers. The country wants to achieve this by raising the prices of wheat and barley for its own farmers.
According to some analysts, the focus is shifting from Ukraine to developments in other important growing regions. Especially in the US, the growing season is not going according to the book. In parts of the country, growers are dealing with severe drought. Weather reports can have a significant impact on price developments in the already tight market. This could cause additional volatility on the grain market, according to analysts.