Grain market continues to search for the bottom

The May wheat contract on the Matif fell yesterday by €1,25 to €254 per tonne. On the CBoT, the decline in the May wheat contract was sharper. In Chicago, prices fell 1,4% to close at $6.82 per bushel. Corn and soy also suffered losses, but the losses there were more limited. Soy was down 0,4% to close at $15.11 per bushel and corn was down 6.52% at $0,2¾ per bushel.

The dissatisfaction emerging in the EU about the import of relatively cheap grain from Ukraine has not gone unnoticed by President Volodymyr Zelensky. "We have found a way out, I think that in the coming days and weeks we can finally present measures to solve the problems that exist in the field of grain trade," Zelenskiy told a press conference in Poland yesterday (Wednesday, April 5) . “There should be no ambiguities or sore points between such good allies and friends as Poland and Ukraine.” Earlier that day, the Polish minister of agriculture resigned due to dissatisfaction with grain imports.

Export
Despite the wrangling with Ukraine, European grain exports appear to have suffered little. According to the latest figures from the European Commission, the EU has exported 2 million tonnes of wheat this season up to April 23,15, compared to 21,52 million tonnes last season. If you delve a little deeper into the figures, the concerns of various Eastern European member states are not entirely unfounded. 4,45 million tons of wheat entered the EU from Ukraine. That was 350.000 tons last season. On balance, almost 3 million tons of wheat from Ukraine entered the EU that has not (yet) been shipped. In addition, significantly more corn from Ukraine went to the EU, namely 11,35 million tons this season until April 2 versus 6,74 million tons last season. The hunger for corn is great in the EU anyway. Imports from Brazil have even more than doubled to 7,89 million tons.

In terms of EU export destinations, North Africa stands out. Morocco already imported 3,58 million wheat this season. That is more than three times as much as last season. Algeria also purchased slightly more EU wheat, but with more than 100.000 additional tons on a total import so far of 3,38 million tons, this shift is less spectacular. The outlier on the other side is Egypt. That country has imported 1,63 million tons of wheat this season compared to 2,30 million tons last season. According to various sources, Egypt's grain supply is relatively small with approximately two months of use. It is not without reason that the Egyptian state buyer GASC yesterday opened a new tender for wheat delivery in May.

Weather improvement
The downward trend on the grain market was further enhanced by the weather reports for the US. Temperatures are rising in the Midwest and Northern U.S. Prairies and relatively favorable weather is forecast for spring work. This puts some pressure on corn and soy in particular. In addition, according to weather models, the chance of rain is increasing in the southern prairies, which are still experiencing severe drought. This is especially important for the development of winter wheat, which is one of the most important crops in this area.

While in North America attention is focused on the coming harvest, in South America farmers are busy with the harvest. The soy harvest in Brazil is progressing steadily. In the period up to April 1, approximately three-quarters of the area has been threshed, according to Conab estimates. This means that the harvest is a bit behind last season. In Argentina, the soy growing season has been disastrous, as we can now conclude. That does not stop the government from stimulating soy exports. From Saturday April 8 to May 24, the country has introduced a program with a very favorable exchange rate for the dollar for the third time. Farmers, cooperatives and other exporters can exchange their 'soy dollar' for 300 pesos. That is well above the exchange rate in the market where you get about 210 pesos for one dollar.