The grain market is having some difficulty choosing a direction. In the EU, the stock market is somewhat down, while in the US the gaze is cautiously turned upwards. The supply of wheat from the Black Sea region continues to be a matter of concern. There was also some rather remarkable news from Australia, which has been plagued by severe flooding in recent months.
The wheat quotations on the Matif are under some pressure at the time of writing this article. What is perhaps most striking is the gap between the December contract - which is almost over - and the March contract. The price normally converges in the last few weeks of trading, but is now moving apart.
On the CBoT, wheat is cautiously up 0,5% after last week's declines. Corn and soy also show a similar price movement on the Chicago stock exchange.
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Cheap wheat dominates
According to various analysts, the wheat market is largely dominated by supply from the Black Sea region. Sellers from Russia and Ukraine are currently offering wheat more competitively than parties from the EU and especially the US. Exporters from the Black Sea region seem to want to hold on to that competitive price. According to market agency IKAR, the price for wheat FOB in Black Sea ports fell by $2 to $315 per tonne. Market agency Sovecon writes that the price has dropped by $1 compared to last week to $314 to $318 per tonne.
Export
Ukraine exported less wheat in November than in October, the Ukrainian Committee of Grain Traders announced on December 1,58. In November, exports remained at 1,98 million tons; compared to 5 in October. A total of 18,3 million tonnes of grains and oilseeds were declared for export in November, according to the committee. The Ukrainian Ministry of Agriculture also announced that a total of 29,9 million tons of grain were exported this season. That is XNUMX% less compared to last season.
Ukraine and the United Arab Emirates (UAE) today announced their intention to negotiate a bilateral trade agreement. “Ukraine is an important trading partner for us,” Thani Al Zeyoudi, minister of foreign trade, told Reuters. "The growth and investment potential was high before the whole geopolitical situation. We think it's time to move things forward." Ukraine is an important supplier of grain to countries in the Middle East. The UAE is keen to acquire an important role as a 'logistics hub' in the region and is facing competition from Saudi Arabia. Earlier this year, the UAE signed treaties with India, Israel and Indonesia.
Top harvest down under
Australia expects a large grain harvest. This is evident from the harvest forecast of the agricultural economics bureau Abares. The total grain harvest is estimated at 62 million tons. That is the second largest harvest ever. Wheat is the largest crop, with a total yield of 36,6 million tonnes, in the season running from July 1, 2022 to June 30, 2023. That is a 1% larger harvest compared to the previous season, when Australian farmers also already threshed a record amount of wheat.
Also for rapeseed the statistics office predicts a record harvest of 7,3 million tons. For barley, Abares expects a total harvest of 13,4 million. The fourth largest harvest ever. “The rain has negatively affected production, yields and quality in some parts of the country, while others are seeing record winter grain yields.” Jared Greenville, director of Abares, writes this in the explanation of the report.
La niña
The weather phenomenon La Niña, which has now persisted for several years in a row, causes abundant precipitation in eastern Australia. In recent months this has resulted in, among other things, severe flooding. According to Abares, 9% fewer summer crops are grown due to the floods. Cotton and rice in particular are less sown.
View the overview of grain prices and the technical analysis here.