Extreme cold in the US, drought in Argentina and exports from the Black Sea region remain the dominant factors in the grain market. Wheat, in particular, is on the rise as a result. The soybean listing was supported by the drought in Argentina and a rise in oil prices.
The March wheat contract on the Matif rose by €8 last Friday to €311,75 per tonne. On the CBoT, wheat rose 1,8% to close at $7.76 per bushel. Corn rose 0,8% and soy rose 0,8% to reach $14.79 per bushel last trading session.
According to analysts, the extremely cold weather in the US is one of the main causes of the increase in wheat prices. The market seemed insensitive to this news for a while, but the cold is now really taking hold on the market. Due to a lack of rain last fall, wheat was already not doing well in large parts of the US. The frost over the Christmas weekend makes wheat susceptible to overwintering in parts of the prairies, where little snow has fallen. The market seems to be realizing that we still have more than six months to go before the wheat harvest starts in North America and the US. The stocks are not excessively large until then. And now that the yield potential of winter wheat is declining, tension on the wheat market is increasing again.
Cheap Ruble
The price of Russian wheat for delivery in the Black Sea region is actually under some pressure, according to the market agencies Sovecon and IKAR. Sovecon cut the price for direct delivery wheat by $1 to $307 to $311 per tonne. IKAR's price comes to $307 per tonne. That's $5 lower compared to last week. The lower wheat price is mainly attributed by both market agencies to a lower exchange rate of the ruble. The large harvest in Russia also puts some pressure on the price and rain in the south of Russia will provide better conditions for sowing summer crops in the coming months in the region where it has been very dry so far. The weekly export of wheat from Russia increased last week to 1,1 million tons compared to 840.000 tons a week earlier. This is partly due to better weather on the Black Sea. Due to storms, several shipowners had to postpone the loading of ships.
Drought remains a problem in Argentina. Some rain has fallen recently, but that is not enough to solve the problems. Wheat in particular has suffered considerably after frost late in the growing season and now with a lack of moisture. Soy is also suffering from drought. Farmers have therefore postponed sowing and the soya in the ground is finding it difficult to grow.