Wheat is gaining momentum on the Matif due to foreign interest in European wheat. Free passage on the Red Sea is important for sales to East Africa and Asia. There are now very different messages going around about this. In Romania, dissatisfaction with grain imports and competition continues, despite government measures to accommodate the protesters.
The March wheat contract on the Matif closed yesterday €0,50 higher at €217 per tonne. Prices also closed in the green on the CBoT, albeit with a modest plus. Wheat closed 0,5% higher at $5.85½ a bushel. Corn was slightly below that, closing 0,4% higher at $4.44 per bushel. Soy slightly outperformed grains, closing 0,6% higher at $12.13½ per bushel.
Confidence in the European grain trade is growing after a series of sales in North Africa and the Middle East this week. The buying wave appears to have no end yet. Yesterday it was announced that Lebanon has bought 72.000 tons of wheat from Ukraine and Japan has stepped in and secured 88.000 tons of wheat from the US and Canada. Jordan has opened a second tender for 120.000 tonnes after purchasing 120.000 tonnes earlier this week. The Black Sea region, and especially Russia, remains a formidable competitor for European exporters, but France, for example, is participating again in the buying wave this week.
Lectures differ somewhat about the influence of the unrest with the Houthi rebels in the Red Sea on the international grain trade. FranceAgriMer expects that French grain exports to Asia will not suffer much from the unrest in the Red Sea. According to the French agricultural agency, it is mainly ships sailing in the direction of Israel that are being attacked. The ships with grain on board sail in the other direction and are therefore in less danger, according to FranceAgriMer. Figures from the World Trade Organization (WHO) are not in line with that explanation. According to the WHO, the number of grain shipments through the Suez Canal fell by 40% in the first half of January. The Ukrainian Minister of Agriculture warned yesterday that this will damage Ukrainian exports. The Ukrainian Ministry of Commerce later released a report calculating that exports in January could be up to 20% lower due to the attacks in the Red Sea.
hectares of premium as compensation
Overseas exports are not the only concern for Ukraine. Several eastern EU member states want to put limits on grain imports from Ukraine to protect their own farmers. In Poland it is a bit quieter as far as the actions of farmers and drivers are concerned. This is different in Romania, with (wild) actions by farmers and transporters spread across the country. The Romanian government has not proven insensitive to the demonstrations and, following promises earlier this week, yesterday made a direct premium of €100 per hectare available as compensation for the lost income due to the import of Ukrainian grain. This does not mean that the protests are over yet. For example, a new three-day demonstration in Bucharest has been announced for Sunday. An additional complicating factor for the government is the fact that the actions are not centrally controlled. This makes it difficult to determine with whom what should be negotiated.