Good and bad news exchanged on the grain market. A Russian attack on a port in Ukraine fueled concerns about a grain market shortage and pushed up wheat prices. Favorable weather for the wheat harvest and the US and the EU, on the other hand, had a price-depressing effect on the grain market.
The wheat market showed a mixed picture in the last trading session on both the Matif and the CBoT. Tuesday's losses were initially recovered during trading hours. Shortly before the stock markets closed, however, the downward trend started again. The Matif closed at €370,50 per tonne, or €2 lower than a day earlier. The CBoT closed at $9.76,50 per bushel (approximately €342 per tonne). That is 0,1% above the closing price the day before. Given the optimism during the trading day, several traders call the final closing price disappointing.
Russia carried out an attack on the Ukrainian port of Mykolaiv on Wednesday. The rocket attack damaged at least two grain elevators and a vegetable oil terminal. It is still unclear how extensive the damage is and whether and when the facilities can be operational again. The port of Mykolaiv is the second largest grain export port in Ukraine. The Russian attack thus fueled fears of shortfalls on the international grain market.
Grain trade must continue
Grain and fertilizer are not covered by the Western trade embargo against Russia, US Secretary of State for Economic Affairs Ramin Toloui emphasized. Countries that have problems importing these goods from Russia can ask the US for help, Toloui announced yesterday. He further indicated that he is positive about the attempt by the UN and the efforts of Turkey as a mediator to set up a corridor so that grain exports from Ukraine can restart.
Russia is heading for a record harvest according to yield forecasts, but grain exports are anything but smooth, according to analysts. The exchange rate of the ruble has risen sharply again in recent weeks and high export taxes have made Russian grain less interesting for foreign buyers. On top of that there are logistical problems. Shipping companies are very cautious about entering into obligations with Russian companies. Partly because of this, it is difficult for Russian grain traders and farmers to make advance sales agreements during and shortly after the harvest. The lack of sales opportunities is a major obstacle to the start of the export of grain from the new harvest.
The weather currently plays an important role in the grain market. Due to drought in the large American and European wheat regions and cold in the American corn and soy regions, there was a significant weather premium in grain quotations. With the change in the weather in the Midwest, where temperatures are rising and favorable conditions for the wheat harvest, grain prices are falling.