The European and US stock exchanges showed opposite movements during the past trading session. There was a trend break in the wheat trade on the Matif. Today Putin has shaken up the grain market considerably. He is not at all happy with the grain deal. In fact, he says that poor countries have been cheated by the agreement.
On the Matif, the September wheat contract delivered €8,75 and closed at €314,25 per tonne. Trading in the September contract is almost over with only more than 3.000 open positions. It is therefore more interesting to see what happened to the other contracts of the 2022 harvest. They also closed lower yesterday, but the decline was less significant than with the September contract. This marks a turnaround on the European futures market. The price of the contracts now increases from €318,75 for December to €325 for May. That is already a sign that the market assumes that a sharp drop in the price is not expected for the time being.
The wheat price on the CBoT did take a step up last trading session. The September contract closed at $8,00 per bushel. Corn was also on the rise while soy took a step back.
Russian President Vladimir Putin today strongly criticized the grain deal that was brokered by the UN and Turkey to restart wheat exports from Ukraine. During a symposium on the economy in Vladivostok, the Russian president said that developing countries were cheated by the grain deal. The grain from Ukraine does not go to the poorest countries as was intended according to Putin. "What we are seeing is a brazen deception, a deception by the international community of our partners in Africa and other countries in urgent need of food. It's simply a scam," Putin said. “It is clear that this approach will only increase the scale of the world's food problems, which could lead to an unprecedented humanitarian catastrophe.”
Buyers are ignoring Russian wheat
Of the 87 ships that left under the deal, only two left with 60.000 tons of grain to the poorest countries, according to Putin. By far the largest part of the grain has been shipped to the EU. Putin accuses the West of rolling out a colonial strategy. He hints that the terms of the deal would have to be adjusted. It bothers Putin that although grain, but also fertilizer, outside of Western sanctions, they do have an effect on Russian grain exports. Restrictions on transport, payment transactions and insurance will remain in force, according to the Russian president.
Putin's fierce words come after a good Russian wheat harvest. The large supply of wheat and the problems set prices for Russian wheat. And even with heavy discounts, there are few countries that dare to buy wheat from Russia. The customers are mainly countries with good ties with the Kremlin. Putin's statement that Ukrainian wheat mainly goes to the EU is also open to discussion. According to UN data, most ships left with Turkey as their final destination. Ships have also left for China, India, Egypt, Yemen and Somalia.