Russian criticism of the grain deal continues to affect the grain market. The UN now seems to want to strengthen the deal by also making specific agreements about fertilizers. In addition to the problems with the export of grain from the Black Sea region, there is now also a threat in the US in the transport of grain. There is a possible strike at the railways that causes problems.
Wheat closed yesterday on the Matif at €336,25 per tonne. That's an increase of $6 from the day before. It should be noted that the stock exchange has switched from the September to the December contract. The real increase is therefore €0,75 if we follow the line of the December contract. On the CBoT, wheat's rise was also marginal at 0,2%. Soy and corn dropped slightly from the previous trading session. Some traders have taken their gains following the rally in these commodities following the presentation of the Wasde report, according to analysts.
Russia's criticism of the grain deal with Ukraine continues to preoccupy players in the wheat market. This time it is not grain that is central, but fertilizer. According to a Western diplomat, the UN is currently in negotiations with Russia to restart ammonia exports from Russia to Ukraine. If a breakthrough is achieved, it would strengthen the grain deal. Given the movement of the prices on the wheat market, the market does not seem to have much confidence in this yet.
Reuters news agency announced on the basis of two well-established sources that Egypt will receive replacement grain for the cargo on a ship that has been moored in Ukraine since February after weeks of negotiations. The state buyer GASC bought 60.000 tons of wheat in December, which was to be shipped in February. The ship Emmakris III has been detained since July at the request of the Ukrainian public prosecutor because of an investigation into the owner. According to Ukraine, the ship is believed to have a Russian owner. The party tendering the GASC tender must supply the wheat at the original price of $361,25 per tonne delivered carriage paid, as the contract does not include a force majeure clause. In an emergency, the seller may deliver grain from another country of origin. In recent months, GASC has released four suppliers from the obligation to supply wheat in tenders closed before the war. However, GASC has not yet made an exception for grain that has already been loaded and will therefore stick to it in this case as well.
US Rail Strike
US wheat exports threaten to be damaged by a possible railroad strike. Some railway companies have announced a stop on grain transport from Thursday in connection with the strike that is planned from Friday. The strike comes at an unfortunate time for the agricultural sector. The maize and soybean harvest has started and part of it is sent by rail to the buyers or ports immediately after the harvest. In addition, the sowing of winter wheat has also started and farmers want to fertilize part of the land that has become available after the harvest. The rail strike also jeopardizes the transport of fertilizer, which is also largely transported by rail. Several railway companies do not accept new applications for the transport of ammonia and other potentially environmentally hazardous substances. It will take another six weeks before the seasonal peak in fertilizer demand gets underway, Josh Linville, fertilizer director at StoneX, told Reuters. About 40% of all fertilizer used in the US is transported by rail somewhere in the chain before reaching the farmyard. Analysts warn that the already high inflation could be exacerbated by the logistical problems.