Russia regains control of wheat market

The May wheat contract on the Matif closed €5 higher yesterday, reaching €237,25 per tonne. Wheat was also on the rise at the CBoT. In Chicago, wheat gained 0,8% to close at 6.31½ per bushel. Corn and soy were also in the green, although the increase here was limited. Corn closed 0,2% higher at 6.46½ per bushel and soy showed a tiny increase of ½¢, bringing the close to $14.48½ per bushel.

After two weeks of very sharp declines at times, this is now the second day in a row that grain prices have cautiously risen again. The alleged drone attack on the Kremlin more or less kicked off this. The risk premium related to the war in Ukraine had been reduced considerably and perhaps even a little too far. The two drones that flew above the Kremlin and exploded woke up the players in the market again in that regard. The attack itself remains very mysterious. According to experts, it is not very likely that Ukraine is responsible, nor is it very likely that it was an attack by the US, as Russian media reported. The Kremlin itself could well be behind it, various experts think. Moscow is under attack by a foreign power, as happened earlier in history by Napoleon and more recently by Nazi Germany. The drone attack is not bad for Russia's domestic propaganda. A new round of conscripts will probably be called up. Seen in this light, the image that danger from outside is rattling at the gates of Moscow is not wrong. Especially with Victory Day next Tuesday (May 9) where the victory over Nazi Germany is commemorated.

Payment transactions
No miracles are expected from the consultations between Russia, Ukraine, Turkey and the UN that are on the agenda today about the extension of the grain deal after May 18. Russia has a list of demands, including access to the international payment system, access to insurance and cheaper freight rates, on which the West is not yet very willing to budge. There is only some news to report about payment transactions. The Turkish state bank Ziraat would like to act as an intermediary for payments of Russian grain. But for this it would have to get permission from the US and the UN. Otherwise it would be a violation of the sanctions. Such an exemption is not completely unthinkable, as is evident from discussions about this with the American bank JP Morgan.

The wheat market also receives support from the growing conditions in the American wheat belt. Last weekend's rain had only a very limited influence on the extreme drought on the southern prairies, according to the US Drought Monitor published yesterday. Another dry region is the Pacific Northwest. Not the largest area in terms of grain production, but a region where an important part of American potatoes are grown.

For soy, Brazil remains the trend setter in terms of pricing. Due to the large soy harvest, Brazilian farmers have something to sell. And in order to achieve sufficient speed, they dare to drop the price. This makes Brazilian soy currently about the cheapest on the world market.