Analysis Grains & Commodities
Russian bear keeps market in limbo
Russia's role in the grain market remains a very special one. They advertise minimum prices at the front, only to come up with something else in the back rooms. At least that is the impression given by the Kremlin. The wheat harvest in Argentina is likely to be lower than previously predicted due to drought. In the Midwest of the US, drought problems are subsiding somewhat.
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Choose the subscription that suits youThe December contract for wheat on the Matif closed €1,50 lower yesterday at €239,50 per tonne. On the CboT, wheat fell 0,1% to $5.78¾ per bushel. Soy also lost slightly, closing 0,2% lower at $13.00½ per bushel. Corn was on the rise, rising 1,1% to $4.88½ per bushel.
The Kremlin continues to play a notable role in the grain market. In the tender from the Egyptian state buyer Gacs this week, the Russian sellers neatly adhered to the minimum price of $270 per tonne, although they almost knew in advance that this would leave them out. The fact that Russia and Egypt are negotiating at government level about the supply of grain puts the rigid attitude in a different light. What is being planned behind the scenes and at what prices? Analysts and traders would like to know, but no hint of the veil has been lifted yet. However, if you think logically, it is unlikely that Egypt will agree to higher prices than are currently in the tenders. On the other hand, Egypt is struggling with the financial settlement of grain purchases and Russia could emphasize this in the talks.
The Ukrainian Ministry of Agriculture assumes that the grain harvest in the country will amount to 57 million tons for the 2023 harvest. In addition, the ministry expects to harvest 22 million tons of oilseeds. Due to a favorable development of the growing season, the total harvest is higher than predicted at the beginning of the year. For the coming harvest, 23% of the expected winter wheat area has been sown. However, the start is somewhat mediocre according to various sources, because it is on the dry side.
Brake growth
Drought is also affecting winter wheat in Argentina, the Buenos Aires grain exchange warns. In the east of the country it is not too bad, but in the west a lack of moisture has already put a considerable brake on the development of wheat. The stock exchange estimates the expected wheat harvest for Argentina at 16,5 million tons. Corn sowing is also delayed, according to the Buenos Aires Stock Exchange. Approximately 7% of the expected 7,3 million hectares have been sown. The five-year average for this period is 15%.
In the US, last week's precipitation on the Northern Plains and Corn Belt can be seen on the drought monitor. The real corn states such as Illinois and Iowa appear slightly less red on the map. In the south, however, there is little change and the red spots tend to become larger.
