Wheat prices on the Matif are mostly moving sideways, while the CBoT has seen a minor downward correction this week. This effect on the Chicago stock market is partly caused by the start of the winter wheat harvest in the south of the US. Furthermore, the export of grain from Ukraine remains a hot potato that is constantly being pushed back.
The September contract on the Matif has remained virtually the same and closed at €392,75 per tonne. That is €0,50 lower than the day before. The December and March contracts remained the same at €386,75 and €383 per tonne respectively. The May contract closed €0,25 lower at €381,75 per tonne. On the CboT, the cautious correction to the wheat quotation that started at the beginning of this week leveled off further. Last trading session, contracts closed marginally lower.
The winter wheat harvest is getting underway in the southern US. The arrival of the new harvest on the market may put pressure on prices on the futures markets. That effect is now also somewhat visible on the CBoT. The drought that the southern prairie states are experiencing is having a positive effect on the harvest. Several experts speak of favorable dry weather for the harvest. The lack of precipitation earlier in the season does result in low hectare yields. Reliable figures are not yet available. Several analysts expect the dip in wheat prices to be short-lived. Now the availability of the new harvest is putting pressure on the market, but if the yield forecasts can be supported by the actual yield, that mood can quickly change.
Agreement on Black Sea far away
Grain exports from Ukraine remain another determining factor in the wheat market. Yesterday, Russia's ambassador to the UN reiterated that Russia has offered safe passage for ships carrying grain from Ukraine. However, Russia does not feel responsible for setting up corridors as Turkey has proposed. Ukraine is reluctant to remove the mines in front of the ports. Ukrainian military experts fear that this will pave the way not only for ships carrying grain but also for Russia's Black Sea Fleet. The Turkish Minister of Foreign Affairs therefore made a different proposal yesterday. The location of the mines is known, according to the minister. He has proposed that cargo ships escorted by the Ukrainian navy could navigate a route around the mines.
Several experts doubt the chance of success of this plan. First of all, the proposal has received little support from Ukraine. The second big question is whether shipowners and insurers dare to send ships through a minefield in a war zone. Turkey, which has good relations with both Kiev and Moscow, is trying to take a leading role in restarting exports via the Black Sea. The Russians continue to maintain that the current food crisis was not caused by Russia but by Western sanctions. Russia can therefore export less grain.