How do we continue to support Ukraine and respond to demonstrating farmers? It is a difficult puzzle for the European Commission. But this morning white smoke came from Brussels. The European Commission has made a proposal to further regulate the import of agricultural products from Ukraine. The French Minister of Agriculture is critical and Polish farmers have not canceled their big day of action.
Wheat on the Matif closed above €200 for the first time this month, albeit narrowly. The May contract added €3, bringing it to €200,25 per tonne. On the CBoT, wheat rose 1,8% to $5.52½ per bushel. Corn showed a more modest increase, gaining 0,8% to close at $4.39½ per bushel. Soy closed 0,2% lower at $11.85½ per bushel.
Europe wants to limit the import of agricultural goods from Ukraine. Agreement was reached on this in the Commission this morning. In January, the Commission proposed exempting access for products from Ukraine from import duties. An 'emergency brake' was only installed for poultry products, eggs and sugar if the import of those products exceeded the reference years 2022 and 2023. Partly due to pressure from protesting farmers, oats, corn, groats and honey have now been added to that list. The Commission's proposal still needs to be passed through the European Parliament and the Council.
Wheat remains outside emergency measures
French Agriculture Minister Marc Fesneau was unenthusiastic about the Commission's proposal on Franceinfo Radio. "We will have to keep working on it. This is not the position France stands for, even if there is some progress." As the EU's largest wheat producer, it is a bitter pill for France that wheat remains outside import restrictions, although the Commission has pledged to monitor imports of wheat and other grains and to intervene if market disruptions occur. According to initial reports, the EU member states Bulgaria, Hungary, Poland, Romania and Slovakia, bordering Ukraine, are also not overflowing with enthusiasm for the European Commission's proposal.
The Kiev government swears that the export of agricultural products does not damage the European internal market. That is certainly no longer the case now, as 95% of exports go through the Black Sea, according to Ukraine. Kiev calls it acceptable that the export limits are based on reference years 2022 and 2023. Adding 2021 (the year before the Russian invasion) as several EU countries want would be unworkable according to Ukraine.
The European Commission's proposal is not enough for Polish farmers. They are taking to the streets en masse today. Various sources report that the Polish police are expecting 580 demonstrations and blockades today, in which a total of approximately 70.000 people will participate. In addition to the import of cheap products from Ukraine, there are also protests against the Green Deal.
Ukraine's survival at stake
US Defense Secretary Lloyd Austin warned yesterday that "Ukraine's survival is at risk." Russia is achieving small victories on the Ukraine front, according to Austin. "That does come at a high price, both in terms of personnel and equipment."
The weather is another factor supporting the wheat market. Moderate frost is forecast on the US prairies early next week. That in itself is nothing strange for this time of year. Freezing temperatures are not uncommon in the area until mid-April. This year the winter wheat is only relatively well developed. This makes the crop in states such as Kansas and Oklahoma sensitive to frost damage. The winter wheat is doing well, by the way. In Kansas and Oklahoma, 55% and 61% of wheat acreage, respectively, received a good or excellent rating from the USDA this week.