Wheat in Europe looks promising

The May wheat contract on the Matif gave up €2,25 yesterday to close at €242,75 per tonne. The quotes on the CBoT also closed in the red. Wheat fell 0,7% to $6.38¾ per bushel. Corn also closed 0,7% lower at $6.46½ per bushel. Soy showed a sharper decline, losing 1,4% to close at $14.45¼ per bushel.

During the trading day, wheat on the CBoT fell to the lowest level since July 2021. Earlier this week, the Matif already hit the lowest price since September 2021. The market is therefore still looking for the bottom according to various analysts. One of the reasons for this, according to some analysts, is that market players are clinging to the successes achieved in recent months with the grain deal. The fact that Russia is now boasting that it does not want to extend the deal after May 18 is not being taken entirely seriously. When push comes to shove, the Kremlin will sign anyway, is the prevailing thought. That feeling was once again reinforced yesterday by Ukraine's call to further increase the pressure on Russia to continue with the grain deal. Now the Western superpowers do not have many means of pressure left, but statements by the Chinese ambassador to the UN earlier this week indicate that this superpower (which still has a certain influence on Russia) wants to use its influence to control the Ukrainian ports on the Black Sea. to keep open.

European emergency package within reach
European Agriculture Commissioner Janusz Wojciechowski is optimistic that the five Member States that closed their borders to grain from Ukraine will reopen their borders in the short term. Last week, the European Commission came up with an emergency package after several eastern member states independently imposed import restrictions on agricultural products from Ukraine. The EU emergency package only concerns wheat, corn, rapeseed, sunflower seeds and sunflower oil. According to Wojciechowski, this concerns 80% to 90% of the products that come from Ukraine. Other products that the five member states are protesting against, including poultry and dairy products, are not included in the emergency package. "I think we are very close to a good agreement," Wojciechowski said after a meeting of agriculture ministers in Luxembourg. The proposal sets aside €100 million to compensate farmers in the five countries for the influx of relatively cheap grain from Ukraine.

There is also news to report from the Black Sea region that is actually providing some support to the market. APK Inform estimates the 2023 Ukrainian wheat harvest at 16,2 million tons. that is significantly lower than the 21 million tons harvested in 2022 according to USDA data. The Ukrainian wheat export for next season has also been sharply adjusted downwards by 8,8 million tons by APK Inform. According to the USDA, total exports for the 2022/23 season amount to 14,5 million tons.

wet spring
Another price-pressing factor on the market is the European Commission's Mars Bulletin. The average wheat harvest in the EU is estimated at 5,74 tonnes per hectare. That is 3% higher than last year and the five-year average. In almost all Member States the yield is equal to or higher than the five-year average. Only the Iberian Peninsula stands out. In Spain the expected yield is 21% behind the five-year average and in Portugal the harvest is expected to be 20% less. This is due to extreme drought in the area. In northwestern Europe, drought is not a problem, but too much precipitation causes problems, according to the Commission. As a result, spring work is being delayed in Ireland, the UK, Northern France, Belgium and the Netherlands. This partly has an impact on summer grains, but yields in potatoes and beets in particular can be significantly lower because they are sown or planted too late.