The December wheat contract on the Matif opened 2,2% higher on Monday and the December wheat contract on the CBOT opened 1,7% higher. The reason for the increase is the Russian bombing of Ukraine. While signals indicate that Ukraine's grain terminals have not been hit, damage to infrastructure such as the railways could delay future shipments.
Wheat is fueled by intensified fighting between Russia and Ukraine and concerns about whether this will somehow disrupt grain exports through the Black Sea and especially whether Ukraine's secure transport channel for grain exports will continue." , Matt Ammerman of StoneX told Reuters. Ammerman thinks that a risk premium will be added to grain prices today anyway.
The bombings were in retaliation after a truckload of explosives exploded this weekend on the Crimean Bridge, a road and rail bridge connecting mainland Russia to Crimea. Ship traffic through the Kerch Strait, as the strait is called that runs between Crimea and Russia, continues. The strait is responsible for about 30 to 40% of Russian export traffic.
Analysts at Russia's SovEcon have raised the country's wheat export forecast by 0,3 million tons to 43,4 million tons. This was done on the basis of, among other things, better harvest prospects. From July to September, Russia is said to have exported about 10,2 million wheat. That's 22% lower than a year ago and about 14% lower than the five-year average.
Grain deal extension
Meanwhile, United Nations negotiators will travel to Moscow in the coming week to discuss an extension of the Black Sea grain deal that would make transport of grains, among other things, possible via the Black Sea again. In recent weeks, the Kremlin has not missed an opportunity to criticize the deal. For example, Russia believes that its own export of grains and fertilizers is still too much hindered. In particular, the resumption of ammonia exports from Russia would be an important part of the new version of the grain agreement.
Martin Griffiths, head of the Office for the Coordination of Humanitarian Affairs, and one of those involved in the grain deal is confident that the grain deal will be extended and expanded. However, Germany's Agraheute writes that analysts believe that the successful Ukrainian counter-offensive and the formal connection of the annexed territories make an extension of the deal increasingly uncertain.
Since the start of the grain deal, 6,2 million tons of agricultural products have left Ukrainian ports, according to the Ukrainian Ministry of Infrastructure. In total, Ukraine exported 1 million tons of grain and pulses from 5 July to 9,17 October. This also includes export routes over land.
Looking ahead to the WASDE report
The October edition of the World Agricultural Supply and Demand report will be published next week. All eyes will initially be on the yield forecasts. If the yield is not too bad, and with it possibly also the closing stocks, this will probably lead to lower prices. Should the already tight closing stocks shrink even further, commodity prices can be expected to rise further. Analysts polled by Reuters expect grain stocks to come in at 554 million bushels, down from the 610 million bushels forecast in September.
Corn estimated lower
The December corn contract on the CBOT opened minimally higher on Monday and appears to be on the rise. The price is supported by concerns about the situation in the Black Sea region and analysts' expectations that the USDA will lower its corn harvest forecast. In terms of maize production, the harvest is expected to reach 13,89 billion bushels, previously predicted 13,94 billion bushels. The final stocks of maize are also estimated to be lower by experts, the estimate now stands at 1,124 billion bushels. In the September WASDE report, the closing stock of maize was estimated at 1,29 billion bushels.
The maize harvest also appears to be low in Europe. On Friday, the European Commission predicted that the lowest harvest since 2007 would be 55.5 million tons. The maize price is also on the rise on the Matif.
Soybeans higher
The soybean crop is estimated at 4,381 billion bushels. That's slightly higher than the forecast in the September WASDE report. The closing stock is also higher and amounts to 248 million bushels, in September the predicted closing stock was still 200 million bushels.
The November soybean contract on the CBOT is also rising due to unrest among traders about the situation in the Black Sea area. Furthermore, demand from China is expected to grow now that the holiday in the country is over and residents are back to work.
Futures
The December wheat contract on the Matif opened the day at €355,75 per tonne and stands at €361,75 per tonne at the time of writing. The CBOT opened at $328,95 per tonne and is trading at $345,02 per tonne. The December corn contract on the CBOT opened the day at $269,17 per tonne and is trading at $276,75 per tonne at the time of writing. The November corn contract on the Matif opened at €341,75 and is currently at €347,25. The November soybean contract opened at $502,29 per tonne and is currently at $509,27 per tonne. {{dataviewSnapshot(50_1665412932)}}