The spread between old and new harvest contracts on the futures markets remains large. Buyers on the physical market try to take advantage of this. In England, the reports about the coming harvest are not very encouraging. The millers' association is even talking about 40% less wheat. Russia has detained two ships loaded with grain for Egypt and in Argentina exports suffered due to strikes.
The May wheat contract on the Matif closed €3,25 lower yesterday at €205 per tonne. On the CBoT, wheat closed 0,9% lower at $5.85 per bushel. Corn closed a quarter cent higher at $4.39½ a bushel. The biggest faller on the Chicago stock exchange last trading session was soy, which lost 1,3% to $11.45½ per bushel.
The gap between old and new wheat harvests is relatively large in both Paris and Chicago. On the Matif, the September contract closed €22 higher than the May contract, at €230 per tonne. In Chicago the difference is less significant. The September contract at $6.03¼ per bushel. According to some sources, because of this gap, the interest among buyers to serve the contract and then have the wheat physically delivered is relatively high.
Blocked
Two ships loaded with wheat destined for Egypt are in custody according to various sources. A total of approximately 120.000 tons of wheat is involved, the purchase and quality of which has been approved by the Egyptian state purchaser Gasc. The exact reason why the ships are not allowed to leave is unknown. Some analysts see this as confirmation of Bloomberg's report that the Kremlin is opposing exporters who do not act in line with Moscow's wishes. Russia would work with minimum prices that exporters are not allowed to drop below, for example in tenders such as those set out by Gasc.
In the United Kingdom, crop harvests in 2024 could be 17% lower than in 2023. The Energy & Climate Intelligenced Uniti (ECIU) warns about this. Production of wheat, barley, oats and rapeseed would be 4 million tonnes lower. ECIU bases its forecast on figures from AHDB and the UK Ministry of Agriculture. The UK millers' association expects the milling and baking wheat harvest to be 40% lower than last season. According to the ECIU, food manufacturers are becoming more dependent on imports from overseas at potentially higher costs.
Economic reforms
In Argentina, grain exports have been delayed due to strikes. The port staff unions have stopped work for two days in protest against reforms of the labor market and the privatization of companies by President Javier Milei. The strike ended on Tuesday afternoon local time and work resumed in the important port of Rosario in the evening. Grain exports are one of the most important sources of foreign currency in economically struggling Argentina.
Datagro has increased its corn yield forecast in Brazil by 1 million tonnes from the previous forecast to 115,9 million tonnes. The forecast for soy has also been increased to 147,9 million tons. That was 146,3 million tons in the market agency's previous forecast. Interest in wheat is declining among Brazilian farmers. At least that is what researchers expect from Cepea. In the last five years, the wheat area grew by approximately 70%. Due to a low wheat price, weather uncertainties and high cultivation costs, the popularity of wheat is waning among Brazilian farmers.