Developments in the wheat market are moving at lightning speed. Yesterday it seemed to be taking a breather, today the fighting in Ukraine has erupted again in all its intensity. All in all, there is anything but a holiday mood in the grain trade. In addition, new harvest forecasts have also been released from France and the US, which are not entirely reassuring. Soy is also receiving a stimulus from the Far East.
The September contract for wheat on the Maitf yesterday yielded €8,25 to €253,50 per tonne. Wheat also took a step back on the CBoT, closing 5,5% lower at $7.19¾ per bushel. Corn was also down, down 3,1% to $5.40¾ per bushel. Soy showed an increase, ending 2,8% higher at $15.56½ per bushel.
Players on the grain market regained some confidence yesterday that a solution will be found for grain exports from Ukraine. European Commissioner Janusz Wojciechowski said that Europe is committed to keeping the EU open solidarity lanes. These are the alternative routes outside the Black Sea for Ukrainian grain exports. He also wants compensation for the additional costs associated with this. NATO also contributed yesterday and announced that it would increase surveillance in the Black Sea, including extra patrols with aircraft and drones. And there were no major attacks on Ukrainian ports by Russia on Wednesday. This brought some peace back to the wheat market in particular last trading session.
Battle flares up
Whether this relative peace will last remains to be seen. This morning it was announced that Russia has launched a new rocket attack on Odessa. A security guard was killed and a terminal was damaged in the attack. On Wednesday evening, Ukrainian Deputy Prime Minister Oleksandr Kubrakov said that 26 port facilities had been damaged by Russian attacks in the last nine days. Five civilian vessels were also damaged. The Russian secret service FSB today reported that traces of explosives were found on a second ship en route from Turkey to Russia. The ship in question visited the Ukrainian port of Reni (near the Danube) twice in June and July. The FSB's messages fit into the strategy to legitimize the halt to the grain deal.
The unrest in the Black Sea area may increase further due to the counter-offensive launched by Ukraine. Various media are reporting that a major attack on Russian defense lines in southern Ukraine is underway. Zelensky has not yet released anything about these reports.
Disappointing forecasts
Market agency Agritel yesterday released a new yield forecast for the wheat harvest in France. The soft wheat harvest amounts to 34,82 million tons, an increase of 3,3% compared to last year. Still, Argitel calls the harvest disappointing. "Due to late frosts in April in the east of France and a total lack of precipitation in the period from mid-May to mid-June, the yield potential in the northern two-thirds of the country has been significantly reduced." Nevertheless, the 2023 harvest would be 1,3% above the five-year average. Agritel's forecast is close to the expectation of the French Ministry of Agriculture, which announced earlier this month that it expected a soft wheat harvest of 35 million tons. The average yield per hectare therefore amounts to 7,3 tons in France. Yield figures also came from the US. The Crop Tour visited North Dakota, where an average spring wheat yield of 48,1 bushels per acre (approximately 3,23 tons per hectare) is forecast in the state. That is just below last year's yield of 48,9 bushels per acre (approximately 3,29 tons per hectare). The expected yield this year in North Dakota is well above the multi-year average of 40,2 bushels per acre (approximately 2,7 tons per hectare).
Soy was on the rise last trading session due to two new orders in the US, probably from China. This contains 501.000 tons of soy from the new harvest. That is a boost for US exporters. The soy in North America is a lot more expensive than that in Brazil.