The grain market shows a somewhat mixed picture. Wheat found its way up, especially in the US futures market. Partly due to a short holiday, the American stock market still had to process the news from earlier this week, but drought in the regions where a lot of spring wheat is grown also adds up. For maize and soybeans, it is Brazil that largely determines the mood with its high yields.
The September wheat contract on the Matif gained €5,25 yesterday to close at €233,25 per tonne. On the CBoT, wheat was also on the rise in the first trading session after Independence Day. The July contract closed 5,3% higher at $6.62 per bushel. Corn lost 1,6% to $5.48¼ per bushel. The July soybean contract also closed down 0,9% to $15.47¼ per bushel. The other soy contracts remained virtually unchanged.
Russia continues to keep wheat market players busy. The Kremlin announced yesterday (Wednesday, July 5) that it has not yet made a decision on extending the Black Sea grains deal beyond July 17. Russia has repeatedly indicated that it sees no reason to extend the deal due to the obstacles the country faces in the export of grain and fertilizer. According to Kremlin spokesman Dmitry Peskov, there is still time for the West to resolve these bottlenecks. "We have not yet made an official decision and will announce the decisions in a timely manner," Peskov said.
The UN Secretary General for Trade and Development, Rebeca Grynspan, mentions the extension of both agreements (one mainly on grain exports from Ukraine and the other on easing trade barriers to Russian grain and fertilizer exports arising from the Western sanctions) are crucial. "We need both to bring prices down and for a stable food and fertilizer market in the world," Grynspan told Reuters. “The UN remains committed to continuing the agreements.” Grynspan indicated that he may travel to Moscow or before the current agreement expires.
Propaganda
The threat surrounding the Zaporizhia nuclear power plant does not reassure players, especially in the wheat market. The Ukrainian authorities announced that they have indications that Russia may have planted explosives in this nuclear power plant, which is one of the largest in the world. The plant has been shut down for eighty days, so a nuclear disaster on the scale of Chernobyl is unlikely, according to experts. But a nuclear leak could potentially take a lot of agricultural land out of production. Several analysts point out that Ukraine's release of this information may also be aimed at obtaining additional military support from the West and that it is not too bad considering the real threat of a Russian sabotage action.
Support from the weather
Drought in North America is another factor supporting the wheat market. The northern prairies in the US are dry and the condition of spring wheat in this important growing region is deteriorating, according to the USDA's Crop Progress report earlier this week. A little further north, in Canada the situation is not much better. And little or no precipitation is forecast in Canada's spring wheat region over the next ten days. The slow harvest progress of wheat further south in the US is giving the price an extra boost, according to some analysts.
The prices of corn and soy are under some pressure due to ample supply from Brazil, according to experts. After the record harvest of 156 million tons of soy, Brazil expects to export 9,4 million tons of soy this month. Last year, Brazil exported 7 million tons of soy in July. Brazilian traders are also slowing down when it comes to corn exports. Exports of 6,3 million tonnes are forecast for July this year, compared to 5,6 million tonnes in the same month last year.