Whether it is a response to Zelensky's statements or not, Russia once again made it clear yesterday that a resumption of the Black Sea grain deal is not on the agenda. That news did not cause a revival on the European wheat market. In fact, the downward price movement continued on the Matif yesterday as well. In the US, on the other hand, the grain market took a step up. One of the reasons for this is the enormous wildfires in the state of Texas.
The March wheat contract on the Matif closed yesterday €3,75 lower at €190,75 per tonne. The May contract, which is the most traded, closed €1,25 lower at €196 per tonne. Grains were on the rise on the American stock exchange. The March wheat contract on the CBoT closed 1,1% higher at $5.77½ per bushel. Corn rose 0,6% to $4.15¾ per bushel. Soy closed 0,5% lower to $11.28¼ per bushel.
Russia has no interest in extending the Black Sea grain deal. Russian Agriculture Minister Dmitry Patrushev informed the Russian news agency Tass. Russia has its own export capabilities and is not looking forward to reviving the deal that the Kremlin withdrew from in July last year. Ukrainian President Zelensky also appears to have little confidence in a continuation of the grain deal. Earlier this week, he pleaded in the US for (military) support so that Ukraine can keep the humanitarian corridor open. That route is the Ukrainian answer to stopping the grain deal.
Concerns about wildfires are increasing in Texas. It is now considered the largest wildfire ever in the state, with approximately 1.700 square miles (approximately 440.000 hectares) having already been burned. State Agriculture Commissioner Sid Miller said the fire likely killed tens of thousands of livestock and destroyed grain silos.
Lack of food
It is not known exactly how many cattle died, but the numbers are large, according to Miller. “We've probably lost tens of thousands of cattle, especially beef cattle.” After years of drought, the US livestock population had already shrunk to its lowest level in more than seventy years. Pastures covered with years-old grass help fuel the fire. “It's almost like gasoline to the fire,” according to Miller. The feedlots (where beef cows are fattened) and dairy farms have so far emerged relatively unscathed from the fires. According to Miller, feed is becoming scarce because not only the pastures have been burned, but also the silos with corn and wheat. "It looks like a moonscape. There is absolutely no vegetation. The cattle that do survive have absolutely nothing to eat." The impending shortage of feed is having an impact on the grain market, according to some analysts.
Buyback program
The Indian government wants to buy 30 to 32 million tons of wheat on the domestic market as intervention stock for the coming harvest. The Ministry of Food announced this yesterday. The total wheat harvest is estimated by the same Indian ministry at 114 million tons. The subcontinent is the largest wheat producer after the EU and China. In the 2022/23 season, the Indian Ministry of Food wanted to purchase 34 million tons of wheat for the various food aid programs in the country. It eventually managed to buy 26 million tons, partly due to high prices on the world market that also penetrated the Indian market.