There is trouble again in the Black Sea region and this did not go unnoticed by the wheat market last trading session. The availability and production development of wheat in Ukraine remains a difficult puzzle in the grain complex. An early resumption of the Black Sea grains deal still remains unlikely. In the soy market, grain analysts are taking a foray into the pig market. The size of the Chinese pig herd to be more precise.
The December wheat contract on the Matif closed yesterday €1,25 higher at €225,50 per tonne. On the CBoT, wheat rose more strongly and recorded a plus of 2,1%, reaching $5.55 per bushel. Corn barely budged from its position on the Chicago exchange, closing 0,1% higher at $4.70 per bushel. Soy shot up in all directions during the trading day. It ultimately resulted in a plus of 0,7% that brought the close to $13.77¼.
Unrest in the Black Sea region gave wheat support last trading session. According to Ukrainian authorities, Russia has carried out a new attack on port facilities in the south of the city of Odessa. The UN World Food Program warned yesterday about the consequences of the Black Sea blockade on Ukrainian wheat production. There is a chance that sufficient wheat will no longer be grown to continue to meet domestic and international demand. According to the UN, there have been 31 documented attacks on grain production and export facilities since mid-July. Of those attacks, 29 were in Odessa Oblast, the region essential for both Danube and Black Sea exports.
According to the Ukrainian Ministry of Agriculture, just over 4 million hectares of wheat have been sown this fall. That is approximately 92% of the planned area. APK-Inform has increased the export forecast for wheat this current season to 13 million tons. That is above the USDA export forecast of 12 million tonnes in the November edition of the Wasde report.
Legal battle
Resuming the grain deal could ease the export woes facing Ukraine. The chance that the grain deal will be resumed in the short term is small. Remarkable news comes from Russia. Reuters reports that Russian agricultural bank Rosselkohzbank has filed a lawsuit against US bank JP Morgan in the Moscow District Court. Rosselkohzbank is the hub in the financial settlement of Russian grain and fertilizer exports. The export of these products is not covered by Western sanctions, but Russian financial institutions are cut off from the international Swift payment system due to the sanctions. A special arrangement had been made between JP Morgan and the Rosselkohzbank to allow payments for grain and fertilizer to continue. That agreement was dissolved in August, just weeks after the grain deal blew up.
There are a number of tenders internationally. A South Korean feed mill has opened a tender for 51.000 tonnes of wheat from Australia and Tunisia has a tender open for 100.000 tonnes of milling wheat that closes today. Jordan has committed 50.000 to 60.000 tons of wheat at $273,50 C&F (carried out).
Livestock China
The soy market is watching the development of the Chinese pig herd with suspicion. According to the Chinese Ministry of Agriculture, there were 42,1 million sows in the country at the end of October. A month earlier there were 42,4 million, but China still thinks the current number of sows is too large. Since the number of sows has been declining for ten months, analysts expect that the Chinese government will take further measures to reduce the sow herd. Prices for fattening pigs are more than 40% lower compared to the same period last year. Fewer pigs in China may indicate that less soy and soy meal will be imported. This is not the case in the short term, given, for example, China's recent buying frenzy on the American soy market.