As stormy as the weather is in the Netherlands, it almost seems that windless on the grain market. America has yet to start up after a day off and in Europe analysts are mainly concerned with what the Kremlin is up to. Ukraine is not waiting and exported considerably more early in the new season compared to the year before. In the longer term, the weather may become the biggest trader in the grain market. Several meteorological institutes are not yet completely in agreement about whether or not we have an El Niño. This weather phenomenon has a particularly negative effect on potential crop yields in Australia and Brazil.
The September contract for wheat on the Matif showed a modest gain yesterday, closing €1,75 higher at €228 per tonne. Trading on the CBoT was halted yesterday due to American Independence Day. Partly because of this, it was an unexciting day in the grain trade.
Whether or not to extend the Black Sea Grain Deal is perhaps the most discussed topic. The EU wants to accommodate the Kremlin by giving Russia's Rosselkhozbank limited access to the Swift international payment system. This gesture was received with little enthusiasm from Russia. According to various experts, Russia is staging the same play that we have seen more often in recent times around the extension of the grain deal. Set high standards and sign the cross at the last minute. However, there is no certainty that Russia will agree again this time. Both Russia and Ukraine are therefore preparing for the scenario that there is no more grain deal after July 17, various sources report.
Ukrainian grain exports are running a lot more smoothly in the first weeks of the 2023/24 season compared to the 2022/23 season. According to the Ukrainian Bureau of Statistics, 5 tons of grain have been exported this season up to July 276.000, compared to 163.000 tons last season. The counter for wheat exports stands at 65.000 tons compared to 24.000 tons a year earlier. Ukraine has exported 20.000 tons of barley, which is double compared to last year. However, by far the largest export product is corn. Of this amount, Ukraine exported 191.000 tons, while this time last year the counter remained at 128.000 tons.
El Niño or not?
The Australian Bureau of Meteorology announced today that the conditions for an El Niño have not yet been met. The agency puts the chance that we will have an El Niño this year at 70%. Australia is therefore more cautious than the UN World Meteorological Organization. Yesterday he announced that we now have an El Niño for the first time in seven years. The weather phenomenon mainly affects the weather in the Southern Hemisphere. In Australia and Brazil, an El Niño means a drier than average period, while in Argentina more rain falls. Australia and Brazil have achieved top harvests in the past three years due to the favorable counterpart of El Niño, La Niña, for these regions. The relatively high yields in Brazil and Australia provided some relief to the tense grain market, especially in the last year and a half.
An El Niño is not necessarily negative. In Argentina, drought records were broken last season and with the change in the weather pattern the chance of more precipitation increases. An El Niño also has a certain effect on the Northern Hemisphere. For Mexico and the southern US, this generally means above-average precipitation. And these are also areas where drought has wreaked havoc over the past two years.