The grain market maintains the upward trend from before the weekend. Problems in the Black Sea region mainly support the wheat market. China, meanwhile, wants to become less dependent on food imports and has put forward ambitious plans to stimulate the agricultural sector.
The March wheat contract on the Matif closed yesterday €1,75 higher at €298,75 per tonne. Today the Matif has even reached €300 again. Wheat also continues its upward trend on the CBoT, rising 0,8% recently to $7.92 per bushel. The May and July contracts on the CBoT have passed $8 per bushel. Corn and also rose on the Chicago stock exchange by 0,6% respectively. Soy closed narrowly higher with the smallest possible increase of $0,25, coming to $15.42¾ per bushel.
The price forecast in the technical analysis for wheat on the Matif today changed from a downward price trend to a neutral price forecast for the first time since November 17. The Stochastic - an indicator used by traders that measures the strength of the upward momentum in a market - is very high at 96 points. The break above the 25-day high is also a sign of a strong short-term uptrend in the wheat market.
Sea mines threaten safe routes
The wheat quotation is supported by the unrest in the Black Sea region. Ukrainian President Zelensky toured Europe last week to gather further support for the fight against the Russian occupier and there is talk of a possible new offensive by Russia in Ukraine. Russia itself is now increasingly critical of the grain deal under which three Ukrainian ports are kept open for grain exports. Russia believes that its exports are being hampered too much by Western sanctions.
Today (Tuesday, February 14) a problem has been added to the uncertainty about grain exports from Ukraine. Odessa military authorities are warning of naval mines floating uncontrollably in the waters around the port. Russia and Ukraine have long accused each other of placing sea mines in coastal waters. The mines, which date back to Soviet times, are anchored in the seabed with anchors. A storm can cause these mines to become loose and drift in the current. "There is a high chance that the sea mines will become loose and wash up on the coast, but also that they will float along the coasts," wrote Serhiy Bratchuk, spokesman for the military administration, according to Reuters on Telegram. This could jeopardize safety on the shipping routes currently used for grain ships.
Chinese ambitions
China wants to become less dependent on the import of grains and oilseeds. Chinese Agriculture Minister Tang Renjian said today at a press conference following China's agricultural plans that the "primary task of a country with a strong agricultural sector is to secure food supplies." And the Chinese government plans to turn China into an agricultural superpower. The focus is on soy. China is now the largest soy importer in the world. To reduce dependence, the government wants to increase production in China by 50 million tons. A strong ambition when you consider that current soy production is approximately 650 million tons. China wants to achieve this, among other things, by allowing GMO soy. China also wants to increase corn yields, further support wheat growers and is promoting the cultivation of rapeseed on land that would otherwise be fallow in winter.
Some analysts question Beijing's grand ambitions. For example, corn yields in China lag significantly behind yields in the US. If China wants to significantly increase yields per hectare, the current agricultural system must be reformed. However, many young farmers move to the cities for better-paid work. As a result, older and less well-educated people in rural areas are left behind for agricultural work.