The fighting in Ukraine continues unabated. Russia has launched a new offensive with drones and missiles in recent days. The Ukrainian port facilities are not left untouched. The effect of the Brazilian record harvest last season is still having an impact on the soy market.
The March contract for wheat on the Matif closed €2023 higher at €0,75 per tonne on the last trading day of 222,50. On the CBoT, wheat took a step back to close 0,6% lower at $6.28 per bushel. Corn made a similar move, also closing 0,6% lower at $4.71¼ per bushel. Soy lost 0,9% to $12.93½ per bushel.
Things remain turbulent in the Black Sea region. On New Year's Eve, Russia attacked Ukraine with drones. One of the targets was the port of Odessa and as a result of the attack a fire broke out in a port terminal. “Odessa's port infrastructure is clearly a priority for the enemy,” Ukrainian military authorities wrote on Telegram. "A large number of drones were sent from the sea to the coastal zone." The fire in the terminal was quickly extinguished and there were casualties in the port, Reuters reports. On Thursday, Ukrainian President Zelensky reported that 12 million tons of freight had been transported via the alternative corridor after the Black Sea grain deal was stopped.
In Turkey, the harvest of grains and other crops will be 2023% higher in 10 compared to a year earlier. The Turkish Statistical Office announced this last week. Wheat production increased by 11,4% to 22 million tons and barley production increased by 8,2% to 9,2 million tons. The sugar beet harvest even increased by 22,1% to 23,5 million tons.
The cards have been shuffled again in South America
Harvest figures give the soy market conflicting signals. The Brazilian record harvest in the 2022/23 season of approximately 160 million tons has a clear price dampening effect. That is 23% more than a season earlier and puts pressure on prices on the Brazilian market. From January 1 to December 22, Brazil exported 28% more soy than in all of 2022. Brazil relies heavily on China for exports. Prices on the Brazilian market last year were on average at the lowest level since 2019. The 2023/24 season will be less successful due to drought in the western and central part of Brazil and flooding in the south of the country.
In Argentina, the soy harvest for the 2022/23 season was disappointing by 25 million tons. That was the smallest harvest since 1999/2000. The current season looks a lot better for Argentina compared to last season. The new president Javier Milei does create uncertainty among exporters. Milei campaigned on encouraging free trade. However, in the first weeks of his presidency, he increased export tariffs on grains and soy. Last Thursday, the Argentine government increased the prices of biodiesel and bioethanol produced from sugar cane by 34% and 28% respectively. This concerns prices for biofuel that must be compulsorily blended into fuel for the domestic market.