The Paris wheat listing maintained its upward momentum yesterday. That trend could continue today following news from Russia. In the US, the wheat market gave mixed signals and corn and soy took a clear step back. According to analysts, the trade is already an advance on the Wasde report that will be published later today.
The March wheat contract on the Matif jumped yesterday by €5,25 to close at €293,75 per tonne. On the CBoT, wheat showed a small decline of 0,1% to $7.49¾ per bushel. Corn and soy also closed lower at 0,7% and 0,4% respectively.
Russia is dissatisfied with how the grain deal is turning out for Russia. This was reported by the TASS news agency from the mouth of Russian State Secretary for Foreign Affairs Alexander Grushko. The State Secretary believes that too little will come of unblocking the Russian ports on the Black Sea. Grushko accuses the EU of not keeping its promises. It has been known for some time that there is dissatisfaction in Russia about the grain deal. A few months ago, Russian President Putin said that developing countries had been cheated out of the grain deal. His criticism was mainly aimed at the destinations of the grain ships that left under the deal. A lot of grain, especially maize, did not go to poor countries at all, but was shipped to the EU.
The EU exported 2022 million tonnes of wheat in the 23/5 season up to and including February 19,05, according to the latest export data published by the European Commission. Wheat exports are therefore 7% ahead of last season. Algerian state grain buyer OAIC has started buying wheat in an international tender. The quantity of wheat specified in the tender is unclear, but several sources report that the cheapest tender is $329 per tonne C&F (delivered free). Jordan has reportedly not purchased grain in a tender for 120.000 tons of wheat that the country had outstanding.
Drought is the uncertain factor
In the US, the wheat market is giving mixed signals. Due to drought in important winter wheat growing regions, there is a firm bottom in the wheat market. However, the trade is cautious about taking positions. Later today (tonight Dutch time), the USDA will release the February edition of the Wasde report. Players want to wait and see how extensive the damage is to American wheat due to the drought and frost at the end of December.
Analysts in the corn and even more soy markets are also eagerly awaiting the Wasde report. Normally in February it is fairly clear what the soy harvest in South America will be like. There is now much uncertainty about how badly the drought has affected Argentina. It is clear that the harvest in Argentina is smaller compared to last year. Few analysts dare to venture a prediction by how much the USDA will reduce the harvest forecast. A drop in the harvest in South America could give prices in Chicago a boost.