Reaching an agreement on the extension of the grain deal puts prices on the grain exchanges under pressure. However, there is no question of a price drop. According to analysts, the market had already more or less calculated that the parties would reach an agreement in time. Flooding is causing major problems in Australia and the worst does not seem to be over yet.
The December wheat contract on the Matif closed yesterday €0,25 higher at €319,75 per tonne. The Paris stock exchange opened this morning at €317 per tonne and at the time of writing the quotation is down more than 1% compared to yesterday's closing price. Wheat prices on the CBoT fell 1,2% in the last trading session to close at $8.17,50 per bushel (approximately €290 per tonne). Corn lost 0,2% in Chicago and soy closed 1,9% lower.
The granting of the grain deal now appears to have been completed. Ukraine released the news this morning and it has been confirmed by the UN and Turkey. Russia has not yet come forward, but the Russian news agency TASS quoted the Russian State Secretary for Foreign Affairs this morning that Russia does not want to cancel the deal and that relaxing sanctions on the export of Russian grain and fertilizers is an important part of the deal. Based on an anonymous source, TASS reports that the parties involved in the grain deal are preparing a joint statement on the extension. It is striking that Russia fired missiles at targets in the Odessa region today for the first time in weeks. The infrastructure has been affected, reports the governor of the region. Odessa is one of the ports covered by the grain deal.
Egypt prefers Russian wheat
Egypt's state-owned purchasing company Gasc has purchased 300.000 tons of wheat from Russia this week, according to several reports. Egypt reportedly pays $362 per tonne for Cost and Freight (free of charge). This was done through direct negotiations. Last week, Gasc also bought 280.000 tons of wheat in Russia. That was a few days after the first international tender since July was canceled by Gasc due to excessive prices.
In Australia, parts of the wheat belt in the south-west of New South Wales province are struggling with the consequences of the floods and several rivers have not yet reached their highest water level. After New Zealand, Singapore is now also helping with rescue workers in the worst affected areas. The US has also been asked for help in what local sources are calling the province's largest ever flood rescue operation. Damage from the floods runs into billions of Australian dollars according to Emergency Management Minister Murray Watt. "The bill is going to be huge and that's before we consider the huge costs of road and infrastructure repairs that lie ahead," Watt told ABC radio. “The worst part is this isn't over yet.”