A somewhat disappointing demand on the world market is putting further pressure on grain prices, according to analysts. Despite the lower prices, Canadian farmers are expanding their wheat acreage significantly, according to Statistics Canada forecast. And on the grain market you cannot ignore the developments in the Black Sea area. The US seems to be moving towards Russia while the European Commission is shrouded in mystery.
The May contract for wheat on the Matif took another small step up yesterday by €0,75 to €243,50 per tonne. The negative mood on the CBoT, which has been on the stock market all week, continued yesterday. Wheat fell 1,8% to $6.274¼ a bushel. Corn and soy also closed lower, but losses here are somewhat more limited than with wheat. Corn lost 0,8% to $6.41½ per bushel and soy closed 0,6% lower at $14.36 per bushel.
Somewhat disappointing export figures from the EU and moderate export expectations for the US are putting pressure on wheat prices. Trade estimates for US exports this week range from 75.000 to 625.000 tonnes. The EU has exported 22 million tons of wheat this season until April 25,02, the European Commission announced. Last season the counter stood at 22,81 million tons. However, European exports are somewhat disappointing according to various analysts.
No clarity
The resistance of five eastern member states to the import of grain from Ukraine continues to concern people. Yesterday, the Romanian minister of agriculture announced that the European Commission is imposing a temporary ban on the export of Ukrainian grain and oilseed to Romania. This restriction would be in effect until June 5. Some analysts point out that there are many rumors circulating about how the European Commission intends to respond to the objections of the five Member States (Poland, Hungary, Slovakia, Bulgaria and Romania). The European Commission itself is now keeping silent. There is certainly something to be said for the fact that Brussels must take action to retain its authority after the unilateral actions of various member states. But we simply do not know what exactly happens in the backrooms and remains speculation according to various experts.
The US appears not to be completely insensitive to Russian objections to extending the grain deal. One of the sticking points for the Kremlin is the disconnection of the Russian banking sector from the international payment system Swift. This causes major problems with paying for grain and fertilizer to foreign buyers. Reuters news agency reports, based on anonymous Russian sources, that the American bank JP Morgan has received an exemption from Washington from payments for agricultural products to the Russian Agricultural Bank. According to one of the sources, the US granted this exemption as an alternative to connecting Russia to the Swift system. However, Russia does not see this as a fully-fledged alternative. JP Morgan, the Russian Agricultural Bank and the US Treasury Department declined to comment on the deal to Reuters. A UN spokesperson confirmed that JP Morgan completed a transaction earlier this month but declined to comment further.
Wheat in demand
Despite the fact that grain prices have fallen sharply compared to a year ago, Canadian farmers are struggling with wheat. According to Statistics Canada's forecast, wheat acreage will increase to 26,97 million acre (approximately 10,9 million hectares). That is the largest area in 22 years and 1,5 million acres (approximately 600.000 hectares) more than last year. The expansion of the area does not automatically mean a record harvest. Drought and relatively low temperatures mean that crops are lagging behind and sowing of summer crops is delayed.