In the futures markets it was only a matter of some plus and minus in the last trading session. It is noticeable on the physical market that prices for Russian wheat are under pressure, despite attempts by the Kremlin to increase the minimum price. The corn and soy crops were little affected by last week's rain and Abu Dhabi is interested in Egyptian agricultural land.
The December wheat contract on the Matif finally closed yesterday unchanged compared to Friday at €237,25 per tonne. In Chicago, grains took a step back. Wheat was down 0,4% at $5.77¼ per bushel and corn lost 0,7% to $4.90 per bushel. Soy closed in the green on the CBoT, rising 0,5% to $12.86¼ per bushel.
Last week's rain in the US only had a limited impact on the corn and soy crops in the country, according to the update of the weekly Crop Progress report. 45% of the corn acreage has been harvested. The five-year average for this period is 42%. With the soy harvest, US growers are even further ahead with 62% threshed compared to 52% in the five-year average. Of the planned winter wheat area, 68% has been sown, which is exactly the same as the five-year average. The development of wheat is slightly behind, with 39% above, compared to 43% in the five-year average. Only in California there is no wheat growing yet. Last year that percentage was 2% in California.
Last week's precipitation is reflected in the USDA's drought figures. 47% of US agricultural land has too little or far too little moisture in the crop layer compared to 50% this time last year.
The price for Russian wheat in the Black Sea region is under some pressure. Market agency Ikar puts the indicative price this week at $225 per ton FOB (delivered to the ship). That's $5 lower than last week. Russian exports amounted to 1 million tons last week, according to SovEcon data.
Interest in land
Egypt plays a prominent role in the grain market at the moment. In an interview with Bloomberg, the Egyptian finance minister indicated that he would soon start hedging wheat. Today, Reuters reports that the agricultural group Al Dahra is in discussions with Egypt about the purchase of agricultural land in Toshka. Al Dahra is half owned by Abu Dhabi. According to one of Reuters' sources, this would involve 210.000 hectares that would be purchased or for which long-term lease agreements would be made. According to another source from the news agency, this would involve half the area. The deal could potentially cost hundreds of millions. The Egyptian government can really use that money. The country is dependent on food imports and only 4% of the land area is used for agriculture.
The project to further develop the desert near the Toshka area in Egypt for agriculture is not new and has been going on since the 90s. It has not been an unqualified success so far despite major investments from both the Egyptian government and financiers from the Arab Emirates and Saudi Arabia. There is also some criticism of the project. Environmental groups are concerned about water withdrawals. From another angle, Al Dahra is accused of focusing too much on exports instead of producing food for the local market.