After several setbacks, there is now a windfall to report regarding wheat exports. Grain exports and politics are not completely separate. This is once again made clear in both the EU and the US. The crops are not yet in the ground and the yield forecasts are trickling in.
The December wheat contract on the Matif closed €1,25 higher yesterday at €221 per tonne. On the Chicago stock exchange, wheat rose more strongly and rose 2,6% to $5.70¼ per bushel. Corn also rose last trading session on the CBoT, closing up 2,7% to $4.61¾ per bushel. Soy had to give up some and ended up 0,3% lower at 13.42¾ per bushel.
Export figures for wheat from the US surprisingly exceeded trade expectations at 23 million bushels. Wheat exports rose to the largest volume in six weeks. The positive mood on the grain market was further fueled by statements from American Secretary of Agriculture Tom Vilsack. According to Vilsack, China has benefited from lower corn prices in Brazil, causing the US to export almost 20% less corn. "Our market is a bit tight and our prices are a bit higher than our friends in Brazil and South America, with the result that China is taking the advantage of the lower prices." The minister expects that exports to China will pick up again in the near future. However, he did not specify how long it would take.
According to Vilsack, this confirms that it is important for American exporters to diversify in sales markets. The USDA created a program in October to boost exports to countries other than China, Canada, Mexico and the EU. $1,2 billion has been earmarked for this over five years and the USDA is now ready to receive the first applications. USDA's diversification is focused on three regions: Africa, Latin America and the Caribbean, and South and Southeast Asia.
Expectations
Market agency Ikar yesterday released the first forecast for the Russian grain harvest of 2024. According to Ikar, total grain production is 145 million tons. Of this, 92 million tons is wheat. The wheat area is the second largest ever sown in Russia. Ikar predicts wheat exports of 48 million tons in the 2024/25 season. Ikar has included the expected yields in Crimea in the figures, but not those in the occupied territories in eastern Ukraine.
In Slovakia, the government has agreed to extend the ban on the import of fourteen different raw materials from Ukraine. According to the Slovak Minister of Agriculture, the trade restrictions will remain in place at least until the end of this year. Wheat, corn, rapeseed and sunflower seeds, among other things, from Ukraine may not be imported.
The roles between grains and soy have been reversed. While soy has been quite volatile recently, it is now the stable factor while corn and wheat are much more volatile. Soy prices are at a relatively high level, especially for this period, when the harvest in the US has only just been completed. The course of the growing season in South America is more decisive for soy. Despite drought and floods in Brazil, market agencies have so far maintained forecasts of 160 million tons or more for Brazil. The forecast from Pátria Agronegócios came as a surprise yesterday with an expected soy harvest of 150,7 million tons. Traders on the CBoT did not really care about this.