Availability of grain from Ukraine is putting pressure on the market

The December wheat contract on the Matif yielded €2,25 yesterday, reaching €236,25 per tonne. On the CBoT, the December wheat contract fell 2,2% to $5.75¾ per bushel. Corn was also down, falling 1,5% to $4.75¼ per bushel. Soy lost 2% to close at $12.93¾ per bushel.

Ukraine's grain exports through the EU remain a thorny issue, but Zelenskiy's government appears to be slowly moving towards the demands of Poland, Slovakia and Hungary. Agreements have reportedly been made with Slovakia about a licensing system. This would ensure that grain is transported from Ukraine and does not end up in Slovakia, forcing local farmers out of the market. Discussions are also being held with Poland in the background, but no breakthrough has yet been reported. The Europe routes are of great importance for Ukrainian grain exporters. Last year, approximately 60% of exports went via the EU.

Kiev is now also busy re-establishing transport via the Black Sea. Last week, two bulk carriers left to load grain via the new 'humanitarian corridor', as Ukraine calls the route. Today it was announced that a second ship loaded with 20.000 grains left the port of Chornomorsk. The first ship with 3.000 tons left last Tuesday.

Different theories 
In the US, the market is suffering from a strong dollar and somewhat weak exports. Players on the grain market are therefore reducing the risk premium included in grain prices. The weather reports for the US are currently being interpreted in different ways by analysts. Precipitation is forecast over the next few days for the northern Prairies and central Midwest. The harvest of corn and soy is therefore delayed, which could reasonably have a somewhat upward effect on prices. On the other hand, it is dry in the US and the area is experiencing a serious precipitation deficit, as the drought monitor published yesterday shows. Especially for the winter wheat that is about to be sown, replenishing the moisture in the soil is more than welcome.

Drought is causing problems with soy cultivation in Brazil. It is too dry in parts of the large agricultural state of Mato Grosso for the seed to take root, according to various sources. Some growers are therefore waiting with the risk of not being able to sow soy at all or running into problems with subsequent cultivation of maize. The cultivation costs for soy in Mato Grosso fell slightly in August compared to July, it was reported the economic institute Imea known. Converted into euros, you are talking about a cost price of approximately €789 per hectare with hardly any difference between conventional or GMO varieties. Compared to last season, cultivation costs have fallen sharply. Last August, the cultivation of one hectare of soy cost approximately €972. Compared to the 2020/21 and 2021/22 seasons, cultivation costs are still approximately a quarter higher.