The grain market is somewhat down. The European wheat market is under pressure from competition from Russia. US trade is mainly concerned with the Wasde report that will be released later today. Market players appear to be prepping for a bearish signal for the US market.
The December wheat contract on the Matif closed yesterday at €330 per tonne. The price has therefore fallen €6 compared to the day before and has reached the lowest point since September 17. Prices were also under pressure on the American stock exchange during the last trading session. Wheat on the CBoT lost 2,1% to close at $8.27,75 per bushel (approximately €303 per tonne). The December corn contract also took a step back, closing 1,2% lower in Chicago. Soy remained virtually unchanged. The November contract - which runs out - closed marginally higher by 0,3%, while the most traded January contract closed slightly lower by 0,3%.
According to analysts, European wheat prices are under pressure due to competition from Russia. Russia has had a bumper wheat harvest. However, exports have been mediocre so far. Buyers have long been cautious about sourcing Russian wheat for fear of violating Western sanctions on the country. Partly due to the grain deal, confidence has increased that grain from Russia can be purchased without further consequences. In recent days, Russian exporters have been bidding sharply for international tenders that have been opened on several occasions. That dampens the mood for the Matif, according to some experts.
Wishes from Zelensky
Ukrainian President Zelensky yesterday urged the US ambassador to the UN not only to quickly clarify the extension of the grain deal, but also to expand the deal further. “We maintain the line that the deal must continue regardless of whether the Russian Federation is willing to do so,” Zelensky told the ambassador. In the current agreement, three Ukrainian ports on the Black Sea are covered by the grain deal. Zelensky wants more ports to be covered by the deal and more goods to be covered by the initiative. Whether the Ukrainian president's additional demands will be met remains to be seen, according to several analysts. Without support from Russia, other countries would have to guarantee the safety of merchant ships on safe routes, for example under the flag of the UN. However, few countries are interested in a direct confrontation with Russia. Commerzbank warned that it is still unclear whether the grain deal can be continued after November 19. The bank sees no signs that grain exports from Ukraine will return to normal.
Traders and speculators on the CBoT are captivated by the Wasde report, which will be published tonight Dutch time. The wheat harvest in Argentina and Australia is expected to be lower, but it is uncertain to what extent the USDA will tinker with yields in the Wasde report. A Reuters poll shows that the trade expects ending stocks of wheat, corn and soy in the US to be adjusted upwards. Developments in the Black Sea region are another more uncertain factor in the report. There are conflicting reports on whether or not grain exports from the area will continue. The trade is therefore cautiously hedging itself on the eve of the publication of the report.