Grain traders remain fickle. The fluctuations on the stock exchange in Paris are not too bad, but in Chicago wheat in particular is booming. Ukrainian wheat growers are having a hard time and this is reflected in the area development for the coming harvest. In the US, ethanol producers and corn growers hope that the rules for sustainable fuels will be adjusted.
The March wheat contract on the Matif closed €3 higher yesterday at €231,25 per tonne. On the CBoT, wheat went a long way toward making up for Monday's loss. The March contract rose 2,6% to $6.25½ a bushel. Corn also showed upside, closing 0,8% higher at $4.85¼ per bushel. Soya had to give up some on the stock exchange in Chicago and closed 0,9% lower at $13.23¾ per bushel.
The EU is not yet catching up with wheat exports. In the current season, 10 million tons of wheat have been exported until December 13,61. This time last year, the export count stood at 15,85 million tons. Ukraine expects to export up to 5 million wheat via the alternative Black Sea route in December. That was 3,8 million tons in November. The Deputy Prime Minister once again emphasized how important grain exports are for the Ukrainian economy. Exports can contribute up to 8% to GDP.
Ukraine is heading for the smallest wheat harvest in twelve years for the 2023/24 season, according to Argus Media (the parent company of Agritel). Argus estimates the next wheat harvest at 20,2 million tons. Last season, Ukraine harvested 22,2 million tons of wheat and the five-year average is 25,9 million tons. According to Argus, the smaller harvest is mainly due to a decrease in the area from 4,65 million to 4,55 million hectares. Growers who are having financial difficulties are more likely to choose oilseeds. The average yield is estimated at 4,43 tons per hectare. This is lower than the top yields in 2022/23, but above the five-year average. After the dry autumn, growing conditions have improved recently.
Grain trading sources have revealed that Tunisia has purchased 100.000 tonnes of soft wheat in a tender for $278,70 per tonne C&F (free of charge). In addition, Tunisia also purchased 75.000 tons of durum wheat at $439,90 per ton C&F. Bangladesh has also issued a tender for 50.000 wheat. According to sources, the strongest bidder there was Russia with $317,56 per tonne C&F.
Jet fuel
Corn and energy are closely linked. A lower oil price affects the ethanol price. A boost for bioethanol producers is that the Biden administration is considering adding ethanol produced from corn to the list of sustainable aviation fuels. This would make the fuel eligible for government subsidies. The decision on this is expected to be taken this week. In Brazil, not even all the soy is in the ground and there is already plenty of speculation about how much corn will be sown as a follow-up crop after soy. Brazilian farmers are afraid that late sowing of soy will jeopardize the Safrinham maize. According to Agrivest, this is confirmed by the willingness to invest in cultivation. According to Agrivest, sales of fertilizer and seed are 18% to 20% behind last year.
Economic Affairs Minister Luis Caputo of the new Argentine government led by Milei presented his economic plans yesterday. Argentina wants to halve the value of the peso to 800 pesos per dollar, eliminate energy subsidies and cancel public tenders. According to Caputo, these are painful measures for the short term, but they are necessary to get the high inflation (which is approaching 150%) under control and to close the gap in the budget. Argentina has had a budget deficit for 123 of the last 113 years, according to Caputo. “We are here to tackle the problem at its roots. To do that, we must end our addiction to budget deficits.” The new path that Argentina has taken has potentially major consequences for the prices of agricultural products. However, the details are not yet known and analysts are groping in the dark as to what exactly Milei will do with the agricultural sector and with the export of grains and oilseeds.