Sea mine dents confidence in grain trade

The December wheat contract on the Matif closed yesterday €1,25 higher at €235,25 per tonne. On the CBoT, wheat made a big move last trading session, closing 3,3% higher at $5.78¼ per bushel. Corn was also on the rise, gaining 2,4% to reach $4.97½ per bushel. soy lags behind the major price movements in grains and showed a modest increase of 0,6% to $12.80¾ per bushel.

Flaring unrest in the Black Sea region is not ignoring the grain market. Russia launched new missile attacks on the ports of Odessa and Mykolaiv and later in the day fifty people were killed in an attack in the Kharkiv region. It is harsh to say so, but players in the grain market are used to it. However, after the Matif closed, reports emerged that a merchant ship had struck a mine in the Black Sea. That caused quite a bit of unrest.

The ship sailing under the Turkish flag struck a mine on Thursday evening local time. British maritime security company Ambrey told Reuters that the incident took place 11 nautical miles north of Romania. "An explosion was heard on the ship after which the anchor was dropped to assess the damage." There were no injuries and the damage to the ship was minor. After a few hours the journey was resumed. A Ukrainian source confirmed to Reuters that it was an incident involving a sea mine, possibly one from the Second World War or a leftover sea mine that was laid more than a year ago to prevent a Russian landing.

The moment comes at an extremely unfortunate time for Ukraine. The country is trying to break the Russian Black Sea blockade with the so-called humanitarian corridor, and not without success. An incident like yesterday dents confidence in the new route. Coincidentally, the British government already warned about the risks earlier this week, explicitly mentioning sea mines. The UN previously called the Ukrainian new routes not a full-fledged alternative to the grain deal from which Russia withdrew in July.

Rally in corn
Corn staged a notable rally in Chicago but remained just below the psychological $5 mark. The market did close at the highest level in approximately two months and the price more than broke through the fifty-day rolling average. Yield expectations for the US harvest are cited as a major reason for the recovery in corn. Opinions differ about the extent to which the drought has had an impact, but in the new drought monitor a black line has been drawn around a large area where drought has a dominant effect. Some sources expect that the USDA may come up with surprising figures about the American harvest next week in the Wasde report. On the other hand, exporters in the US face stiff competition from Brazil.