The drought in the US significantly affected the mood on the grain markets on Tuesday. Vladimir Putin says Russia is considering withdrawing from the Black Sea deal. The Brazilian corn and soybean harvest is also higher than a year ago.
The September contract for wheat on the Matif closed €0,50 higher on Tuesday, ending the day at €238,75. In Chicago, the July wheat rate closed at $6,36 per bushel. The September contract on the CBOT closed higher at $6,48 per bushel.
The American wheat price is rising partly due to the rise in the price of soy and corn. Concerns about those crops reinforce concerns about the overall U.S. harvest this season. Bad news was the increase in European soft wheat exports to 29,9 million tonnes, from 26,4 million tonnes a year ago. There is also the continued demand for European wheat from Egypt, which wants to buy 8,2 million tons of wheat.
The Russian president said yesterday (June 13) that Russia is considering withdrawing from the Black Sea deal. The country feels cheated by the West because it has not fulfilled any of the promises it made to bring Russian agricultural goods to the world market.
Big news on the grain market was the impending merger of Bunge and Viterra, which will make the former company one of the largest grain traders in the world in terms of turnover and further increase the company's power in Brazil. However, it remains to be seen whether the financial authorities will approve the takeover. The Russian bank VTB is selling its 45% share in the Russian grain giant Demetra.
No hope
The July corn contract lost value on Tuesday, closing at $6,13 per bushel. The September contract was on the rise, closing at $5,46 per bushel. The price for September is rising on the expectation that the forecast rain this week will not be enough to solve the problems with the US wheat harvest.
Brazilian corn exports for the 2022/23 season are estimated by the Brazilian statistics agency CONAB at 48 million tons, unchanged from a previous estimate. CONAB did increase the expected yield of the second corn harvest from 96,1 million tons to 96,3 million tons. The total corn harvest is estimated at 125,7 million tons, considerably more than the 113,1 million tons a year ago.
In addition to the weather, Ukraine, Brazil and Argentina also pose fierce competition for American corn. The crop may become less attractive this summer, especially on the export market. July contracts also fell due to weak demand for US corn contracts.
And while analysts expect demand for American soy to increase in the coming months, corn from the US will soon face competition from cheaper corn from Brazil.
Biodiesel
The July soybean contract rose to close higher at $1,40 per bushel, the August soybean contract also rose to close at $1,33 per bushel.
CONAB revised the Brazilian harvest forecast upwards and now estimates that 2022 million tons of soybeans will be harvested in the 23/155,7 season. Previously the estimate was 154,8 million tons. This is also considerably more than the 125,5 million tons of a year ago. A negative factor is a decrease in European soybean imports by 1,6 million tons.
There are also concerns that weather conditions in the US are bad news for the prospects of US soy. The price is also higher due to an increase in the crude oil price. An increase of more than 3% means that soy oil becomes attractive for use in biofuel.
Finally, Iranian state feed importer SLAL has launched an international tender to purchase 120.000 tons of corn and 120.000 tons of soybean meal.