Latter rain prevents crop failure of German grain

The September wheat contract on the Matif closed €1,50 higher yesterday at €229,25 per tonne. The CBoT also had its way up. The September wheat contract rose 1,1% to $6.39¾ per bushel. Corn closed 3,6% higher at $4.93½ per bushel and soy slightly below that with a 2,8% increase to $14.84¾ per bushel.

The rise in prices on the American stock market comes as a surprise. The USDA Wasde report released on Wednesday was downright bearish and the subsequent downward correction was therefore logical, there is consensus on that. A small recovery in the last trading session would have been logical, but the fact that corn and soy are almost back to previous levels so quickly was unexpected. A common comment on the July edition of the Wasde report was that it left room for a downward adjustment of the American harvest in the August edition, and you could say that the market already took an advance on this yesterday.

Little time
The time to extend the Black Sea grain deal is running out (the current agreement expires on Monday 17 July) and the UN and the EU are making a frantic attempt to convince Putin by granting a subsidiary of the Rosselkhozbank access to the international payment system Swift. UN Secretary General Antonio Guterres sent a proposal about this to Putin. During Guterres' visit to Brussels yesterday, he informed the press present. According to the Russian news agency Tass, Putin has not seen Guterres' letter, but Russia is in contact with UN diplomats.

More than 32 million tons of grain have now been exported from Ukraine via the Black Sea under the deal. In addition to the agreements on safe access to the Ukrainian ports on the Black Sea, the UN is talking about free access for Russia for agricultural products and fertilizers in a separate agreement. And according to the Kremlin, these agreements are not being fulfilled. In addition, the grain deal is not achieving the desired effect according to the Kremlin. According to Russia, the intention is that the grain from Ukraine goes to poor parts of the world. However, a lot of grain from Ukraine goes to richer parts of the world and they can afford it, according to Russia. The UN disputes that reading and states that the extra supply from Ukraine has caused prices on the world market to fall, which indirectly also benefits poor countries.

Struggling to keep up with demand
Harvest figures and weather forecasts remain another major uncertain factor on the market. Yesterday the Deutscher Raiffeisenverband (DRV) wrote that the rain of recent weeks has averted a complete crop failure. The total German grain harvest is estimated at 42 million tons. That is a below-average harvest according to DRV. For rapeseed, the association expects a harvest of 4,1 million tons, which is comparable to last year. However, the world grain market remains tight, according to DRV, partly due to drought in parts of Europe and North America. "We have to assume that the world balance will remain tight," says Guido Seedler, grain expert at DRV in the message accompanying the figures.

The drought in the US reported by DRV is once again confirmed in the new drought monitor. The red spots on the map are slowly but surely moving further northeast in the US and you could almost say they are chasing the growing crops. The wheat on the southern prairies has come a long way and now corn and soybeans further north are taking the cake.