Russian President Putin has shaken up the wheat market with his criticism of the grain deal. The market is no longer so sure that the deal will hold. Soy is under some pressure, partly because of actions by Argentina.
The September wheat contract closed €12 higher yesterday at €326,25 per tonne. The most traded contract is the December contract, which rose by €10 to €328,75 per tonne. On the CBoT, wheat prices rose 3,3% to $8.26,50 per bushel. That is the highest price in almost two months. Corn and soy, on the other hand, took a step back on the American stock market.
Russian President Putin's statements have made players in the wheat market nervous. It is expected that the deal will be limited. Putin made it clear yesterday that he is not satisfied with how the grain deal with Ukraine is turning out. He said at an economic conference that Third World countries have been cheated by the deal and that it is mainly the EU that benefits from it.
What Putin did not immediately mention is the advantage that Ukraine has from the deal. The president focuses on support for poor countries, but grain exports are in fact one of the most important sources of income for Ukraine. The money that comes in can be used to finance the war against Russia. Meanwhile, Russian grain exports are struggling due to Western sanctions. Grain is not included, but buyers are very careful about doing business with Russia for fear of violating the sanctions somewhere. Russia itself benefits little or nothing from the grain deal. The grain deal is therefore at odds with Russian interests.
Favorable export conditions
Soya was under pressure due to developments in China and Argentina. Argentina wants to boost soy exports to promote hard currency inflows. To achieve this, the government has introduced a favorable exchange rate for soy exporters for this month. The trading companies are sensitive to this, as the export figures from the Rosario stock exchange show. On Monday and Tuesday, 2,13 million tons of soy were exported. By comparison, last week exports remained at 667.000 tons. China imported 24,5% less soy in August compared to the same month a year earlier. The U.S. Department of Agriculture kept the condition of corn and soy in the Crop Progress report the same as last week. The spring wheat harvest is lagging behind the five-year average. 71% has been harvested compared to 83% in the five-year average.