The wheat market is still shaking after the sharp fall in prices just before the weekend. The supply of relatively cheap wheat from the Black Sea region weighs heavily on the European and American stock markets. Analysts are seeing among several signs that the grain deal could be extended.
The wheat quotation on the Matif is still in negative territory after the sharp drop last Friday. At the time of writing, the prices for both the March and May contracts stand at €277,50 per tonne. On the CboT, wheat contracts are down by more than 1% compared to the closing price for the weekend.
The supply of grain from the Black Sea region continues to play a dominant role, especially on the wheat market. On Friday, Russian President Putin and Turkish President Erdogan held talks about, among other things, the extension of the grain deal and Russian fertilizer exports. Players in the grain market saw this as a sign that the extension of the deal may be one step closer. The effect of this was clearly noticeable on the wheat market given the sharp drop in the price.
China shows two faces
China, meanwhile, is trying to position itself as a new mediator in the conflict between Ukraine and Russia. China presented a peace plan for Ukraine and Russia last week. However, the plan was not welcomed by Ukraine, partly because the country was not involved in drawing it up. China's peace plan also receives little support from Europe and the US. They see it mainly as a repetition of moves and an opportunity for China to present itself as a neutral power. Previously, China was in the news about alleged arms deliveries to Russia. The ambivalent role that China is playing worries some analysts. On the other hand, it is true that China, as Russia's most important trading partner, is certainly pulling the necessary weight when it comes to, for example, extending the grain deal. As a net importer of grain, China has an interest in keeping Ukrainian ports open and could thus give Russia a push in the right direction to extend the deal.
In the meantime, the export of grain from Ukraine continues to be difficult. The latest figures from the Ukrainian Ministry of Agriculture show that 31,8 million tons of grain have been exported so far this season. This means that exports are 27% behind last season. So far this season, 11,2 million tons of wheat, 18 million tons of corn and 2 million tons of barley have been shipped. The winter crops for the coming harvest have safely made it through the coldest part of winter, writes Ukrainian Meteorological Service. Due to the continental climate, Ukraine is sensitive to cold winters, dry springs and extreme heat in summer. In any case, the first phase, the cold winter, did not cause any major problems.
Late frost in India
In India, late frost has caused problems in rapeseed. The plants were well developed and starting to develop the hooks. But frost in mid-January put an end to the good yield expectations. A record area of rapeseed has been sown this year, namely 9,8 million hectares, which the government estimates would result in a harvest of 12,8 million tonnes. The association for the processing of oilseeds predicts that despite the area expansion of more than 7%, the yield of rapeseed this season may remain the same as the previous season at more than 10 million tons.