The price of December contract tarew on the Matif rocketed on Monday, reaching its highest point since June 22, a month before the grain deal closed. Unrest in the Black Sea region and fear that the grain deal will not be extended were important reasons for the sharp price increase.
In Paris, wheat closed the day at €364,25 per tonne. Wheat prices also shot up on the CBOT, reaching their highest point since June 23. In Chicago, the price ended at $9,34 per bushel ($343,18 per ton). An important cause for this is the aforementioned fear of an impact of the war on grain transport and the grain deal. Grain traders are also trying to improve their position in the market in the run-up to the release of the Wasde report on Wednesday.
On Thursday, Sovecon reported that Russia had harvested some 102,8 million tons of wheat with an average yield of 3,6 tons per hectare. A year ago, the yield on the same day was 75,5 million tons and 2,82 tons per hectare. The English wheat harvest is also higher and is estimated at 14,4 million tons, 12% higher than a year ago. The British Ministry of Agriculture and the Environment reported this on Monday.
Corn
The price of the November corn contract on the Matif reached its highest point since the end of July, at €346,75 per tonne. On the CBOT, the December corn contract closed at its highest since July 13, $6,97 per bushel ($274,39 per ton). The corn price also rose due to unrest about the situation in the Black Sea region. In addition, corn harvests in both Europe and America are expected to be lower in the run-up to the Wasde report. Even the price of soybeans, which on Thursday reached the lowest point since January 13, rose slightly. The November contract closed at $13,74 per bushel ($504,86). Traders there seem to be concerned about a higher harvest than expected. There is also uncertainty about demand from China. The Brazilian soybean harvest is slightly behind schedule due to unpredictable weather conditions. This year the harvest is 9,6% complete, last year it was 10,6%.
Zwarte Zee
Apart from the unrest in the country, which was hit by several Russian missiles on Monday, Ukraine has another problem. There is a grain traffic jam near Istanbul. 120 ships are waiting at the checkpoint in Istanbul to sail to or from Ukraine. The waiting time at the control center, where Russian and Ukrainian inspectors, among others, check ship loads, has increased from five to six days in mid-September to ten and sometimes fifteen days in early October.
According to the Financial Times, the delay is causing increasing frustration in Kiev. The country wants to make room in the grain silos for the new harvest as quickly as possible. The country is therefore insisting on the deployment of additional inspectors to clear the backlog. Additional inspectors may be one of the talking points in the negotiations on the grain deal, with Ukraine would like to see the port of Mykolaiv added to the deal. Russia, in turn, is committed to relaxing ammonia exports.
Russia, which expects a record wheat harvest, appears to be focusing on large export figures, which could put pressure on wheat prices in the future.
Traffic jam on the Mississippi
The boat traffic jam that occurred on the Mississippi River due to low water levels was partially resolved this weekend. The US Coast Guard reported Monday that two sections of the river near Memphis, Tennessee and Stack Island have been dredged.
Shipping in the river has been at a standstill since last week when some boats and barges became stuck on the bottom. The closure prevented grains such as soybeans, wheat and corn from reaching export terminals on the US Gulf Coast (about 60% of US grain exports leave the country there). Fertilizers, road salt and other goods could also not be transported upriver to the northern US.
On Monday, about 22 tow boats with 392 barges were still waiting at Stack Island to sail further south. The traffic jam to the north had now been resolved. There are no more traffic jams at Memphis. Last week, more than a hundred tow boats and more than two thousand inland vessels were waiting, causing transport costs and grain barges to skyrocket in price.
Although grain shipments can now reach US export terminals again, ship traffic is not expected to return to previous levels quickly. Drought has also been forecast for the coming weeks and it is expected that the water level of the river at Memphis will drop even further. That could cause further problems as the soybean and corn harvests get underway in the US.