The mood remains downright down on the grains market. A solution for the import of grain from Ukraine to the EU that is within reach will mainly push the wheat price down. Rain on the dry prairies in the US also helps bring prices down. In India, the damage from the heat at the beginning of April is less than expected, or so the pace of the build-up of the intervention stock would suggest.
The May contract for wheat on the Matif closed last Friday at €238,50 per tonne. Today the Paris stock exchange is closed for Labor Day. On the stock exchange, the prices of wheat, corn and soy rebounded slightly before the weekend after losses earlier that week. That recovery is only continuing to a limited extent today. Soy is up a few cents at the time of writing, while corn and wheat are in the red.
The export of grain from the Black Sea region remains a very sensitive topic on the grain market. The EU announced on Friday that duty-free imports of Ukrainian grain will be extended for a year, but with a number of exceptions for the most sensitive agricultural raw materials. Quotas and import duties can be imposed on meat, dairy, sugar and some grains. Together with a support package, the EU is responding to the objections of the five eastern member states. Ukraine is not happy about the export restrictions. "There are sufficient legal grounds for the immediate resumption of exports of Ukrainian agricultural products to Poland, Romania, Hungary, Slovakia and Bulgaria, as well as the continuation of unhindered exports to other EU Member States," the Ukrainian Foreign Ministry said in response. to Reuters news agency. The fact that Ukraine is so concerned about overland exports can partly be explained by the fact that Russia does not appear to have any intention of extending the Black Sea deal after May 18. This would mean that the most important export route for Ukraine would disappear.
In the US, rain that fell this weekend in parts of eastern Kansas, Texas and Oklahoma is adding bearish momentum to the stock market. Winter wheat does not suddenly turn into a flourishing crop in these drought-stricken states, but every drop that now falls during the shooting and/or filling of the grain is a hit. The weather was a little less cooperative for corn in the corn belt. Sowing was ahead of the multi-year average in the latest Crop Progress report, but night frost may have caused damage this weekend, several local media write.
Big plans
In Argentina, drought has had a major impact in the 2022/23 season and, among other things, corn and soy yields are severely disappointing. This not only causes problems for the affected farmers, but also creates a hole in the budget of the government of the country that is already in economic crisis. To make the agricultural sector more resilient to drought, the Argentine government has released $394 million in loans for irrigation projects. That is part of a total package of $2,07 billion that the government wants to invest to almost double the area that can be irrigated. According to the ministry, 2,1 million hectares can now be irrigated in Argentina. This must be expanded by 1,9 million hectares with the gigantic support package.
In India, the damage from the heavy downpours and hail storms that were followed by a heat wave at the end of May and the beginning of April is not too bad, at least if you look at the speed at which the intervention stock of wheat is being built up. Until April 26, the government has already purchased 19,5 million tons of wheat, an anonymous source told Reuters. This means that more wheat has now been taken into intervention than in the entire previous season, when 18,8 million tons were purchased by the state. At this rate, a total of 30 million wheat could be purchased by the government this season, according to a trader. That is sufficient for the government food programs for the poorest part of the population, but the export ban will probably remain in place, according to sources. The export ban was imposed in May 2022 after wheat prices went through the roof in both the domestic and global markets. A small comment that must be made about the state purchase program is that the grain offered to the government is not of great quality. The good wheat goes to the commercial traders and what is left over goes to the government.