Ukraine is trapped on all sides on the grain market. In the east of the EU there is resistance to the import of relatively cheap grain from the country, while Russia is cutting back on the export route. Poland now wants to shift something to accommodate Ukraine. It is unclear how other EU member states will deal with this. The Kremlin, meanwhile, is bringing serious charges of corruption to Kiev.
The May wheat contract on the Matif took a sharp step higher yesterday for the second time in a row. The price rose by €4,75 to close at €260,75 per tonne. The mood at the CBoT was a lot more subdued. The May contract rose 0,2% to $6.98 per bushel. Corn and soy also closed in the green but posted a limited increase. Both corn and rose 0,1% to $6.77½ and $15.19¼ per bushel, respectively.
The developments surrounding the export of grain from Ukraine continue to concern analysts and traders. Poland and Hungary closed their borders to grain from Ukraine last weekend to protect their own farmers against the influx of relatively cheap grain from the east. On Monday it was announced that Slovakia has also imposed import restrictions on agricultural products (in addition to grain, including sugar) from Ukraine. Romania is considering following the example of these countries and the Czech Republic is following the developments with interest, but does not want to impose an import ban itself because, according to the Czech Ministry of Agriculture, this is not in accordance with European market rules. The import of grain from Ukraine does cause problems in the Czech Republic, according to the ministry. Compared to last season, there is now approximately 40% more grain in the Czech silos. Grain from Ukraine destined for the Middle East and North Africa is stuck in the Czech Republic due to logistical problems, which means there could be a shortage of storage capacity for the new harvest next summer.
Clamp
Closing the EU borders poses major problems for Ukraine. It is not without reason that Ukraine traveled to Warsaw on Monday to somehow reopen the Polish border. A breakthrough was achieved there yesterday after two days. It has been agreed that the transit of grain will be sealed and controlled. "We were forced to close our borders to the large quantities of grain flowing into Poland to which the European Commission turned a blind eye," Polish Agriculture Minister Robert Telus told a press meeting. "At the same time, we have continued to engage with Ukraine on how we can continue to facilitate the transit of grain without leaving grain stuck in Poland."
The new deal between Poland and Ukraine will take effect at midnight on Friday. Ukrainian First Deputy Prime Minister Yulia Svyrydenko said during the press conference that she had confidence in the agreement.
Wheat exports from the EU are now 8,5% ahead of last season, according to export figures from the European Commission. Until April 16, 24,4 million tons of wheat have been exported by the EU. Morocco, Algeria and Nigeria are the largest buyers of European wheat. In terms of imports, Ukraine stands head and shoulders above the rest. So far this season, 4,6 million tonnes of wheat have entered the EU from Ukraine, compared to 350.000 tonnes in the same period last season. The import of corn from Ukraine is also notable. This season 12,2 million tons have been imported compared to 6,9 million last season.
Bribes
The grain deal between Ukraine and Russia, under the guidance of Turkey and the UN, is now going through a rough patch. Russia continues to train the inspection of ships en route to and from Ukraine, various sources report, but unlike a week ago, the Joint Coordination Center (JCC) does not (yet) mention this on the website. US Secretary of State Antony Blinken accuses Russia of breaking promises to countries dependent on grain from the Black Sea region. Blinken made the statements after the G7 meeting in Japan.
Russian Foreign Minister Sergei Lavrov will discuss an extension of the grain deal after May 18 with UN Secretary General Antonio Guterres in New York next week. Lavrov will be in New York next week to chair the two meetings of the UN Security Council, of which Russia will have the rotating gavel in April. The chance of a grant is small according to the Kremlin because not enough is being done to smooth out Russian exports of grain and fertilizer, which are hampered by Western sanctions.
Today a new chapter has been added to the Russian objections. The Kremlin accuses Ukraine of sabotaging the grain deal by demanding bribes from shipowners to register ships for inspections under the grain deal. According to the spokesperson for the Russian Foreign Ministry, Ukraine is trying to get the most out of the grain deal and Kiev does not shy away from abusing some rules and procedures or demanding bribes from shipowners. Ship owners who do not agree to this will be put at the back of the queue, according to the spokesperson. Russia does not provide hard evidence for these serious accusations.