A correction took place on the wheat market last trading session. According to analysts, this was mainly because traders and speculators took their profits after the rally earlier this week. Fundamentally, weather concerns continue to dominate the market. Players in the soy market are closely monitoring the situation in Brazil. Not only the crops that were still standing were damaged, silos were also flooded. The exact extent of the damage remains difficult to estimate.
The May wheat contract on the Matif closed yesterday €5,50 lower at €209,75 per tonne. The September contract yielded €2,50, bringing it to €242,75 per tonne. Wheat also took a step back on the CBoT. The May contract closed 1,2% lower at $6.24¾ per bushel. Corn also closed lower, falling 0,7% to $4.53¾ per bushel. Soybean moved more sideways, keeping losses to 0,2% at $12.32¼ per bushel.
According to analysts, the correction in the wheat market is largely the result of traders and speculators taking their profits after the rally earlier this week. The grain market remains volatile and the weather premium may be further built up in the near future, according to analysts. It is dry in the south-west of Russia and this will hardly change in the next two weeks if the weather reports are correct. There may be additional frost damage later this week. In the US, the chance of rain in Kansas is increasing slightly. Together with the slightly better winter wheat situation, this put slight price pressure on the Chicago stock exchange.
More bullish news for wheat came from Canada. Statistics Canada writes that Canada's wheat stock is 11,8 million tonnes. The trade expected a stock of 12,2 million tons.
Out of favor
Things continue to rumble in Russian grain exports. Six Russian grain exporters would not receive export quotas. At least that is what several sources say based on a Telegram message from the Russian Grain Union that quotes documents from the Russian Ministry of Agriculture. TD Rif, LDC Vostok and Cofco, among others, are said to have fallen out of favor with the Kremlin. The total volume of export licenses is 1,37 million tons and, according to the Russian Grain Union, this is divided among other exporters.
Damage in Brazil is difficult to estimate
In Brazil, the damage to grains from the extreme rain in the province of Rio Grande do Sul is still difficult to estimate, according to the local farmers' association. Since April 29, 150 to more than 500 millimeters of water has fallen in the province. In Restinga Seca, which is centrally located in Rio Grande do Sul, 540 millimeters were thrown from the rain gauge at the measuring station. 68 highways are completely or partially impassable in 154 places due to flooding.
Due to the enormous amounts of rain, rivers in the area have burst their banks. These rivers are an important link in the logistics to the Rio Grande seaport. There are large storage and transshipment facilities for grain along the rivers. It is still difficult to estimate how much grain has been lost in the silos, according to Paulo Pires, chairman of the farmers' union Fecoagro. "They are large silos, so the damage is significant, but it is difficult to put concrete figures on them," Pires told Reuters.
Incentive for agriculture
Argentina is attempting to boost the agricultural sector. The Argentine Ministry of Economic Affairs is scrapping the import tax on fertilizer. Argentina had a 6% import tax on fertilizers containing ammonium nitrate. According to Ciafa, Argentine farmers used 2023 million tons of fertilizer in 4,6, of which 2,6 million tons came from abroad. The Milei government also wants to reduce the import tax on herbicides. There is now a rate of 24% to 35%. “The reduction in rates will encourage the use of fertilizers and herbicides by farmers and increase crop yields,” the ministry said in the announcement.