Wheat and corn prices on the CBOT and Matif closed lower on Monday. Despite ongoing turmoil in Ukraine, the price fell on news that talks between the UN and Russia are continuing.
According to UN spokesperson Stephane Dujarric, the United Nations held positive and constructive talks in Moscow on Monday about the extension of the grain deal. That day and on Sunday, UN Trade Delegate Rebeca Grynspan and Martin Griffiths, UN Undersecretary for Humanitarian Affairs, spoke with Russian Deputy Foreign Minister Sergei Vershinin.
There were also individual discussions with Deputy Prime Minister Andrei Belousov about facilitating Russian exports of grains and fertilizers to the world market and with Deputy Defense Minister Alexander Fomin about more effective implementation of the deal. Russia has complained about these two points in the past. Despite the agreements in the first deal, the country says its exports are still hampered.
Ukrainian grain exports have now almost returned to pre-war levels. Exports during the first seventeen days of October were only 2,4% lower than a year ago. Despite the fact that some ports are still closed and the Russian invasion is still ongoing.
So far, 2,12 million tons of grains have been exported in October. Most of this is corn and wheat. Last year this amounted to 2,17 million tons of grains in the first seventeen days of October.
In the season that runs from July to June, 10,8 million tons of grains have been exported so far. Last year that was 16,5 million tons in the same period.
Wheat
While there were still fears of higher prices at the beginning of the day due to further escalation of the war, tension on the market decreased after a UN spokesperson made it clear that talks on the grain deal would continue.
Wheat export inspections for the season that started June 1 stand at 9,4 million tons. 0,3% higher than the same period a year ago. By the end of last week, Russia had harvested 103,7 million tons of wheat, an average yield of 3,59 tons per hectare. Last year that was 76,5 million tons and 2,81 tons per hectare. Sovecon reports this.
There is good news for the wheat market from India. That country has ample supplies of rice and wheat and is considering selling wheat on the open market if it needs to control prices. The country wants to do this to keep local prices under control. India banned overseas sales of wheat in March after a sudden rise in temperatures threatened the wheat harvest. The country first wanted to secure the food supply for its 1,4 billion inhabitants.
Drought
In the US, drought is limiting winter wheat sowing. As a result, plans may have to be adjusted downwards despite high prices and already tight supplies. The drought mainly affects Kansas and Oklahoma. There, farmers are discouraged from starting sowing and the grain that has already been sown cannot develop properly. Farmers in the region would like to benefit from the high prices, but the drought makes them reluctant to spend money on expensive seeds and fertilizers.
In the long term, not sowing wheat can also have consequences for other crops. Wheat protects the top layer of the soil against wind erosion. And so some farmers have no choice but to sow their soil and hope and pray that it germinates.
Corn
The November corn contract on the Matif and the December corn contract on the CBOT closed lower. News that the harvest in the US is continuing at a good pace and that the amount of corn on the market is also increasing, is good for prices. Weekly corn exports amounted to 448.000 tons last week, which is in line with expectations. However, compared to last year, it is a significant decrease. Then 1,049 million tons were exported this time of year. Corn exports are also 21,2% lower for the current season than a year ago. Since September 1, 3,3 million tons have been exported.
The corn harvest is behind schedule. Last week, 45% of the corn was harvested. That is considerably more than the 31% of a week ago, but still less than the 50% of last year. The five-year average is 40%.
Soybeans
Soybeans closed slightly higher on Monday, despite better than expected harvest figures. Soybeans are 63% harvested, up from 58% a year ago and also up from the five-year average of 52%. American soy exports also went well last week. A total of 1,88 million tons of soy was inspected for export. That is still 23% less than a year ago, but well above traders' expectations. The difference with last year is mainly due to the low water level on the Mississippi, which makes it difficult for ship traffic to reach the ports on the American Gulf Coast.
In Brazil, 24% of the area is now sown with soybeans, i.e. 6 million hectares. Last week only 10% of the area had been sown. The country is ahead of schedule compared to a year ago when 22% of soy was sown. Even more soy could have been sown if there had not been excessive rainfall in certain states. Good progress in Brazil is putting pressure on the market, as there is a fear that China will turn to South America for its soy imports at the expense of the US.
Futures
The price of the December wheat contract on the Matif fell by 1,28% to €346,25 per tonne. The decline on the CBOT was only 0,029%, where the price stood at $8,61 per bushel ($313,36 per tonne) on Monday. The price of the November corn contract on the Matif closed 2,2% lower and ended Monday at €332,75 per tonne. On the CBOT, a bushel of corn on the December contract was priced at $6,84 ($269,27 per ton) on Monday. The November soybean contract on the CBOT was 0,13% cheaper on Monday, trading at $13,85 per bushel (508,90 per tonne) at the end of the day.