The grain market is on an upward trend. Additional unrest in Ukraine due to the delivery of German tanks, concerns about a tight availability of grains on the world market and healthy demand support the market. Reports about an improvement in the weather, but also a large harvest in Australia do little to change that.
The March wheat contract on the Matif closed yesterday €4,25 higher at €288,75 per tonne. On the CBoT, wheat rose to $7.52½ per bushel, up 1,5% from the close a day earlier. Corn and soy were also up on the Chicago stock exchange with 1,1% and 1,4% respectively.
The war in Ukraine remains a dominant factor, especially on the wheat market. Fears that the conflict will flare up further due to, among other things, the supply of additional war equipment, are driving up prices. That mood was somewhat reinforced yesterday by the yield forecasts for the 2023 harvest by the Ukrainian committee of grain traders UGA. Because farmers are sowing less wheat and corn, the total Ukrainian harvest next season will not exceed 18 million tons of corn and 16 million tons of wheat. According to data from the Ukrainian Ministry of Agriculture, the wheat harvest in 2022 amounted to approximately 20 tons and the corn harvest 22 to 23 million tons. According to UGA, total production of grains and oilseeds could drop to approximately 50 million tons for the coming harvest. For comparison, the 2022 harvest is estimated at 67 million tons and in 2021, the last year before the war, 106 million tons of grain were harvested. It must be noted that due to a favorable growing season, the 2021 harvest was far above average.
Impossible inventory
Mark Jekanowski, chairman of the department within the USDA that, among other things, publishes the Wasde report, yesterday, during a grain conference organized in Paris by Argus Media, questioned the Russian grain stock figures as presented by the official authorities. According to Jekanowski, a wheat harvest of more than 104 million tons is not possible given the weather during the growing season and the past harvests. The USDA therefore kept the Russian wheat harvest at 91 million tons, which is still an excellent result.
Australia has also had a good grain harvest. According to the USDA attaché in Australia, the country is heading for its third consecutive record harvest. For wheat the total harvest is estimated at 37 million tons and for barley at 13,5 million tons. In Western and South Australia the growing season was almost perfect, resulting in high yields. In contrast to the high yields there, there were slightly disappointing yields in New South Wales and Victoria due to flooding in September and October.