Wheat prices have moved mostly sideways over the past trading session. The grain harvest is about to start in several key production regions. The market seems to be waiting for that. Ukrainian farmers are very concerned about whether they will have a chance to harvest the grain and whether they will also be able to find buyers for the wheat.
The wheat quotation on the Matif yesterday recorded a small plus of €2,50 compared to the closing price on Friday. The September contract therefore amounts to €394,50 per tonne. On the CBoT, quotes moved mainly sideways with gains that remained below 1%. The wheat harvest is just around the corner in southern Europe and the US. The market is awaiting the first realized yield figures and is cautious about choosing a direction until then.
In Ukraine, grain growers are concerned about whether and how the harvest can be harvested. "The agricultural sector is one of the few sectors that continues to operate," Volodymyr Onyschuk, a farmer in Ukraine, told Reuters. "They want to kill that (Russia) and thereby stop this source of income." The crops are sensitive to fires that can be caused by shelling and bombings, according to Onyschuk. That could be a disaster when the grain harvest starts in the coming weeks. Farmers are very afraid to go into the field with the combines. In addition to the risk of shelling and the fire that this can cause, there is the fear of mines and ammunition left behind in the fields.
No question
The grain trade is also difficult in Ukraine. Traders are very reluctant even to buy stocks of the 2021 harvest, for fear of what will happen if their storage facilities are subsequently attacked. This translates into the price offered for wheat. Some traders offer only a third of the price of wheat just before the war. Farmers have already focused on the next crop year. Supplies of fertilizer and fuel have fallen sharply. Without buyers for the grain, farmers are struggling to secure the financing to purchase next season's supplies, if that's even possible. “Fuel prices have risen and fertilizer prices are insane,” grain grower Valentyn Matviyenko told Reuters. "Our financial resources have shrunk considerably. We have put everything into this harvest."
Confidence among growers is also declining in Australia
It is not only farmers in Ukraine who are looking at the coming crop year with great concern. Confidence in the future among growers has also decreased in Australia. Crop prices, especially grain prices, are relatively high. These higher prices are desperately needed to cover the increased cultivation costs, Rabobank Australia writes in the results of a survey among Australian farmers. The costs for fuel, fertilizer, transport and machinery are skyrocketing. In addition, Australia is experiencing broader inflation in the economy. According to the bank, this puts pressure on margins in agriculture and therefore also on the mood in the sector.