The negative sentiment continues in the grain market. News from Ukraine puts pressure on the wheat market and Brazil largely determines the direction of the maize trade. Better-than-expected returns are the common denominator.
For the seventh trading session in a row, wheat on the Matif closes lower. Yesterday the September contract gave up €1,75 to close at €232 per tonne. On the CBoT, wheat did not fare much better, falling 1,9% to a close at $6.28¼ per bushel. Corn closed 1,1% lower at $4.82 per bushel. Soy did not escape, although the loss was limited to 0,3% at a close of $14.24¾ per bushel.
It will not surprise you, but news from the Black Sea region was also discussed yesterday. The Ukrainian Grain Sector Association (UGA) yesterday released a new harvest forecast. The total harvest of grains and oilseeds is estimated by the UGA at 76,8 million tons. That is 7,8 million tons more than in the previous forecast and 3 million tons higher than last season's harvest. The higher yield is due to favorable weather during the growing season, according to the UGA. The area of arable land in production is 2,2 million hectares smaller compared to last season. And that is also the critical comment you can make about these figures. A record hectare yield despite all the problems in terms of finances, personnel and logistics is not realistic, various sources have warned.
Slip of the tongue?
There is also a lot to do about the grain deal. US Secretary of State Antony Blinken told reporters at the UN meeting yesterday that the US will do whatever it takes to ensure free passage of Russian food if the grain deal is revived. A spicy comment according to analysts. Grain and food from Russia have been left out of the West's sanctions packages against the Kremlin, everyone has always been told. Blinken is now probably inadvertently sending the signal that Russia's arguments for withdrawing from the grain deal are not completely out of the blue.
Ukraine is currently exploring the possibilities of somehow making transport via the Black Sea possible again. One option, for example, could be for the Ukrainian government to insure private ships itself. The only question is whether shipowners have sufficient confidence in this. The Danube is currently the most important export route and the effect of the Russian attacks there appears to be limited for the time being. Romanian authorities expect that the month of August could break transshipment records.
Top year for Brazilian farmer
Corn is of course also affected by what happens in wheat. But more important are the developments in South America. After a record soy harvest, Brazil is now also on course for a very good corn harvest. Market agency Celeres expects a total corn yield of 139 million tons. In Argentina, the corn harvest is slower than average, the Buenos Aires grain exchange reports. 73% of the area has been threshed compared to 81% this time last year and 88% in the long-term average.
In the soy trade, players are mainly concerned with yields and stocks in the US. StoneX has lowered its yield forecast by 127 million bushels to 4,173 billion bushels for the 2023 crop, bringing the average yield to 50,5 bushels per acre. China is currently keeping quiet about buying soy from the US. And demand from China, for example, would come in handy to boost exports to the multi-year average.