Analysis Grains & Commodities
European wheat at the level of price fighter Russia
In recent months, Russia has made a name for itself as the price fighter on the wheat market. If we look at Egypt's latest tender, there is not much left of the price difference between the Russian wheat and the Matif. As far as wheat is concerned, we have little reason to complain in Europe, as the GleoGlam Crop Monitor shows.
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Choose the subscription that suits youThe May wheat contract on the Matif closed yesterday €2,75 lower at €251,25 per tonne. On the CBoT, wheat was down 1% at $6.75½ per bushel. Corn and soy also closed in the red on the American stock market. Corn fell 1,4% to $6.43½ per bushel and soy finished at $14.92½ per bushel, or a decline of 1,2%.
Egyptian state buyer GASC has purchased 600.000 tons of wheat from Russia in a tender for delivery in May. The tenderers for this tender have adhered to the minimum price, which was rumored from the Kremlin a few weeks ago, namely $275 per tonne FOB (delivered in port). The average price C&F (free) for delivery in Egypt averages just above $293 per tonne for this tender. Converted into dollars per tonne, the closing Matif price was also approximately $275 per tonne. Transport from Rouen (place of delivery for the Matif) to Egypt may be more expensive than from the Russian ports on the Black Sea, but the fact that Russian wheat is now so much cheaper than European wheat is now evident when we look at this tender. Chicago is approximately $25 per ton below the European and Russian price.
Europe colored green
The weather is another determining factor in the grain market. Rain forecast for the southeastern US and higher temperatures for the Midwest put further pressure on the grain market yesterday. Yesterday (Thursday April 6) the new Crop Monitor was also released on growing conditions worldwide. The conditions for wheat in the Northern Hemisphere are particularly striking. Almost the entire European continent is colored green. Only Ukraine is yellow because of the war that is being waged there, which has made parts uncultivable. The drought in the American wheat belt is also a point of attention. Drought also plays a role in southern Kazakhstan. A lack of moisture could also become an obstacle to good yields in central Russia around the Urals, some analysts warn. However, in the Crop Monitor the area is colored gray because mainly spring wheat is grown there.
The drought in Argentina is no longer a surprise, but is also confirmed again in the Crop Monitor. The south of Brazil is also affected by this, but that does not stand in the way of a top soy harvest. Safras & Mercado analysts have increased the yield forecast by 2,6 million tons to 155,1 million tons. In the Wasde report, the USDA assumed a harvest of 153 million tons. And Brazilian farmers are in no hurry to sell soy, according to Safras & Mercado. Only 44% have been sold versus 60% in the five-year average at this time. The Buenos Aires grain exchange keeps the soy harvest forecast the same as last week at 25 million tons. The USDA assumes 33 million tons. The extent of the effect of the aggressive export policy, including the favorable exchange rate for the 'soy dollar', remains to be seen due to the disappointing harvest, some analysts warn. You can also export what is not there.
