Grain trade is off to a hesitant start this week. The extension of the grain deal does not bring Russia what it expects. Buyers remain cautious about doing business. The American experts have turned their attention more to China and are closely following the developments surrounding corona.
Grain prices are slightly under pressure today. On the Matif, wheat contracts are down approximately 1% at the time of writing this article. On the CBoT, the reduction for wheat is approaching 2% compared to the weekend's price. For corn and soy, the loss remains below 1%.
Look here for the current rates
According to some experts, the European wheat quotation is suffering from competition from Russia. Market agency IKAR reports a price of $314 per ton free on board (FOB) for Russian wheat in the Black Sea region. That is $3,5 lower than a week earlier. Despite the extension of the grain deal, wheat exports from Russia remain relatively difficult. This also has an effect on the choices farmers make for the coming season. According to Sovecon, Russian growers have sown 17,6 million hectares of winter grain. By this time last season, 18,3 million hectares of winter grain had been sown, according to the market office. The winter in Russia has so far been favorable for winter grains, according to Sovecon. Turkish President Erdogan announced today (November 21) that he would process Russian wheat into flour. That flower is then made available free of charge to the poorest countries in the world to alleviate the food crisis in the hardest-hit areas, reports the Turkish newspaper Habertürk. Russia and Turkey are said to have reached an agreement on this.
Expensive dollar and disappointing demand from China
In the US, grain prices are depressed due to the combination of an expensive dollar and concerns about economic developments in China. For a while it seemed that China would loosen the strict corona reins a bit. With the call for residents in Beijing's busiest neighborhoods to stay at home on Monday after an excessively high number of infections, and a five-day lockdown in at least one district in Guangzhou, the opposite appears to be true. A high number of corona infections in China is seen as a price depressing factor by experts on grain and energy prices.
The expensive dollar does not help American wheat exports either. Compared to Russian wheat, wheat from the US is already relatively expensive and this effect is further reinforced by the high dollar exchange rate. Looking at the gap between wheat on the CBoT and Matif, one wonders whether US traders are being a bit too cautious. The price difference has grown in recent days, but not yet extremely.
View the overview of grain prices and the technical analysis here.