Take a breather and take a closer look at where we are exactly, that is what we saw happen during the last trading session. The flare-up of the war in Ukraine has created a firm bottom in the market, especially in Europe. In the US, the grain market is more of a weather market with a heat wave in the heart of the country. In Europe you hear little about the extreme heat in southern Europe.
The September contract for wheat on the Matif took another step higher yesterday and closed €2 higher at €255,75 per tonne. On the CBoT, wheat corrected slightly to close 0,1% lower at $7.27 per bushel. Corn was also down, closing 1,5% lower at $5.37¼ per bushel. Soy is rowing against the current and closed last trading session 0,2% higher at $14.95 per bushel.
Russia has launched rocket attacks on Ukraine for the fourth day in a row. The intensity of the attacks is decreasing, but the governor of the Odessa region reported this morning that an attack on a grain terminal of an 'agricultural company' was hit last night, causing the loss of 100 tons of peas and 20 tons of barley, several sources reported based on a Telegram (app) message.
Shipping in trouble
In response to Russia considering all ships in the Black Sea en route to Ukraine as hostile, Ukraine declared yesterday that as of today it considers all ships en route to Russian ports as hostile. The Russian ambassador to the UN again weakened the threats and reported that merchant ships will not be attacked just like that. A look at the maritime maps that track ship movements shows that there are practically no ships in Ukrainian waters east of Crimea. Most do not go further than Romania. There is traffic towards the Sea of Azov (towards Donetsk) and the Ukrainian threat may be aimed at causing unrest here.
During the European Council yesterday, the Ukrainian Ministry of Foreign Affairs called on the Foreign Ministers of the Member States to increase transport capacity on the solidarity routes (Solidarity Lanes) to maximize. "Russia's goal is not only to harm Ukraine, but also to enrich itself at the expense of high food prices," said Dmytro Kuleba, the Ukrainian Foreign Minister in the press release after the summit. According to Kuleba, the Kremlin is trying to calm its competition from Ukraine and thus expand Russia's sales market. "Today, Ukraine proposed to the UN and Turkey to continue the work of the grain corridor in a tripartite form, including inspections of ships in the Joint Coordination Center (the inspections before and after leaving the Black Sea). We await their response off," Kuleba said.
Heat wave
In the US, the grain market is driven less by the war and more by the weather. The northern prairies in the western Midwest are already experiencing high temperatures and the warm front will expand further in the coming days, according to forecasters. The long-term forecast (eleven to fifteen days ahead) predicts temperatures below the long-term average for this time of year for this region. In addition to high temperatures, drought is perhaps an even bigger problem. And an increased chance of rain yesterday put some pressure on corn prices in particular.
From the EU you hardly hear anything about the weather in relation to the grain market, while there are also some things going on here. It is extremely warm around the Mediterranean area, and especially in Southern Europe. And while in parts of North Africa considerable depreciation has been made on potential crop yields quite early in the growing season, few adjustments are being made for Southern Europe. And while temperatures well into the 30 degrees cannot remain without consequences.