Availability of grain from the Black Sea region put some pressure on wheat prices last trading session. Tension continues to rise over the export of Ukrainian grain via the EU. Poland clearly showed that it was not impressed by the Ukrainian threats. On the other side of the lake, the rain does not fall where it is wanted. Brazilian farmers could use rain for soy, but it will remain dry there, while in the US rain is forecast and growers would prefer steady weather for the harvest.
The December contract for wheat on the Matif closed yesterday €1,25 lower at €237,25 per tonne. The picture on the CBoT was somewhat mixed last trading session. Wheat fell 1,2% to $5.84 a bushel. Soy moved mainly sideways, closing 0,1% lower at $13.15½ per bushel. Corn was on the rise, gaining 1% to close at $4.76¼ per bushel.
According to analysts, the fact that wheat is in decline has to do with competition from the Black Sea region. Russia is keeping a relatively low profile, but the country has a large amount of grain that it wants to sell on the world market. Ukraine is making more noise in that regard. The first ship to pick up a load of grain in the Odessa region via the new 'humanitarian corridor', as Ukraine calls the route across the Black Sea, is now said to be in Romanian territorial waters, according to some sources. If the new route is successful, pressure on land routes could be reduced, not to mention the cost benefits of sea transport.
Self-protection
Meanwhile, tensions are increasing over the export of grain from Ukraine via the EU. Brussels has lifted restrictive measures put in place to protect European farmers in eastern member states. Poland, Hungary and Slovakia disagree and have subsequently imposed restrictive measures on their own. In response, Ukraine filed an official complaint with the World Trade Organization (WTO). Andrzej Duda, the president of Poland, showed during a UN meeting yesterday that he was not impressed by Ukraine's complaints. "Ukraine should realize that it receives support from us and that we are an important transit country to Ukraine," Duda said during the press conference. Duda looks forward to any proceedings at the WTO with confidence. Poland will explain the situation before the WTO. He emphasizes that Poland has taken measures against the import of grain from Ukraine and not against transit. “There are companies in Ukraine that have an interest in selling as much grain as possible as quickly as possible. We must protect ourselves against that,” says Duda. "I would compare it to a drowning man. A drowning man is extremely dangerous because he can pull you down with him. He can simply drown his rescuer."
Always something, rarely something good
In the US, the Crop Progress report had an impact on the grain market. The condition of both corn and soy showed a cautious stabilization. Drought has plagued much of the growing season, but now the mood among analysts is: let it stay dry for another month. The crops have matured a long way, so extra moisture has little effect on yields. Rain is difficult during the harvest and can also adversely affect the quality of corn and soy. The precipitation that is forecast for the weekend is certainly not making the market enthusiastic.
In Brazil, growers are starting the new soy season. And that could cause tension on the market in the coming weeks. We are dealing with an El Niño year and that generally means less precipitation in Brazil. Low moisture in the soil may cause Brazilian farmers to wait a little longer than normal before sowing soy in anticipation of a rain shower. Not a major problem for the yield potential of soy. Later in the season this can cause problems with subsequent cultivation of maize. Due to a late soy harvest, the optimal time for sowing corn in February/March may be missed. It is possible that the weather premium for soy and corn will therefore be increased again in the coming weeks.