The grain market is making remarkable movements. The Matif gave in, while on the same day it became known that the export of grain from Ukraine is faltering after the extension of the grain deal. Exports in South America are not going according to plan either.
The wheat quotation on the Matif took a step back yesterday for the second day in a row. The December contract closed €6 lower at €321,25 per tonne. The March 2023 contract closed yesterday at €315 per tonne. The gap between the December contract that is about to expire and the next contract is therefore limited. The CBoT was closed last trading day for Thanksgiving Day.
The extension of the grain deal has not provided an additional boost to grain exports from Ukraine. In fact, exports have declined compared to the old agreement. According to UN data, no more than five ships per day have left since November 19 (the effective date of the new deal). Confidence in the grain deal was already dented when Russia withdrew support and then cooperated again. Shipowners and insurers were therefore cautious about sending new ships to the Black Sea. That certainly plays a role in the disappointing exports from Ukraine. Another factor is the long waiting time for the inspection of the ships. According to the deal, all incoming and outgoing ships must be checked. The JCC responsible for these checks reported on Wednesday that 112 ships were waiting for inspection in the waters near Istanbul. Some have been at anchor for more than a month now. The speed around the checks can be increased, but Russia is obstructing this according to Ukraine.
Protests
Transport is also a point of attention in Brazil. Some supporters of President Bolsonaro are not resigned to his loss of the elections a few weeks ago. Protesters have blocked roads and caused riots in the agriculturally important state of Mato Grosso. Transprot companies are therefore reluctant to send trucks on the road. According to the interest group of grain traders and processors Abiove, in which Bunge and Cargill are represented, among others, the price for road transport has risen by approximately 20%, Reuters news agency reports. The more expensive transport eats into buyers' margins just at the time when farmers are selling the second crop (cultivation after soy) of maize.
In Argentina, farmers are concerned about whether they have anything to sell. The Buenos Aires grain exchange announced yesterday that only 19,4% of the planned soy area has been sown. Last year that percentage was 39,4%. "There is too little moisture in the soil and no rain is forecast for the short term. This hinders the progress of the sowing machines," the stock exchange writes in the commentary. Corn sowing is slightly less behind last season. 23,8% of the planned area is in the ground. Last season it was 30% around this time.
View the overview of grain prices and the technical analysis here.