The grain market is moving up again. Optimism about the resumption of grain exports from Ukraine is fading further and further. Furthermore, the USDA with the Crop Progress report and the European JRC institute with the MARS Bulletin gave a clear bullish signal to the market.
The grain market has taken another step up after last Friday's dip. The September wheat contract closed €6 higher yesterday at €331,75 per tonne. On the CBoT, the quotation of the September wheat contract rose by 2,9%. Soy and corn were also on the rise on the American stock market. Soy increased 1,8% and corn 2,3%.
The increase in wheat prices is largely caused by the continued uncertainty about the export of Ukrainian grain via the Black Sea ports. An agreement was reached on Friday, but before the ink was even dry, doubts arose about the feasibility. On Saturday, the port of Odessa was already under fire by the Russians with rockets. Today (Tuesday, July 26) the mayor of Mykolaiv announced that this port on the Black Sea has also been bombarded by the Russians. According to the mayor, a large-scale attack with missiles has been launched on the south of Ukraine, from the Black Sea and with air support, he said on Ukrainian state television. He left unclear what was hit and the extent of the damage.
The White House said yesterday that it had serious doubts about the grain deal that was concluded on Friday due to the attack on Odessa. The US therefore continues to explore options to further increase grain exports via land routes. "We are closely monitoring whether Russia is adhering to the commitments it made in the agreement. The attack could threaten Russia's credibility," a White House spokesperson said in a statement.
Adjustment of yield forecasts
The European JRC presented the July edition of the Mars bulletin yesterday. Compared to the previous edition, the yield forecasts for most crops have been adjusted downwards. The average wheat yield in Europe is estimated at 5,54 tons per hectare. That is 1,4% below the five-year average and 0,4% lower compared to the June edition of the report. The biggest change, however, is for grain corn. The yield is estimated at an average of 7,25 tons per hectare. That is 7,8% below the five-year average and a 7,9% reduction compared to the June edition of the Mars bulletin. Drought is the main cause for the reduction in yield forecasts. The crops sown last autumn have not suffered much from the recent heat wave in large parts of Europe, but crops such as maize and spring barley have suffered considerably.
The USDA has also lowered the condition of corn and soy in the US. Due to drought and heat, the corn area with good or excellent status has been reduced from 64% last week to 61% this week. The area of good or excellent soy has been reduced by 3% to 59% of the area. The winter wheat harvest is progressing steadily. 77% of the winter wheat has now been harvested.