Wheat took a big step higher last trading session. In addition to a weather premium, the war premium will also be increased. Market players are not confident that the frost damage to grains in Russia will not be too bad and that the infrastructure will remain undamaged in a possible spring offensive in Ukraine. In the US, arable farmers have been catching up with sowing corn.
The September wheat contract on the Matif closed €9,75 higher yesterday at €256,50 per tonne. On the CBot, wheat rose 5,8% to $6.88¾ per bushel. Corn was also on the rise, closing 1,8% higher at $4.60½ per bushel. Soy also posted green numbers, closing 1,6% higher at $12.48 per bushel.
Setbacks in the Black Sea region are the main cause of yesterday's rally in wheat, according to analysts. Market agency Ikar estimates that approximately 900.000 hectares of grain have frost damage due to the low temperatures earlier this month. Partly as a result, the price for Russian wheat rose sharply last week. Ikar puts the quotation at $239 per ton compared to $221 a week earlier. SovEcon expects Russia to export 4,1 million tons of wheat this month. In April, Russia exported 4,6 million tons of wheat.
In addition to frost, also drought
Not only the south of Russia had to deal with frost. The mercury also dropped below zero in parts of Ukraine. The Ukrainian APK-Inform estimates that the yield of wheat and other grains can be approximately 20% to 30% lower due to frost damage. In addition to freezing, it also remains dry in eastern Ukraine, southern Russia and western Kazakhstan. No significant rainfall is forecast in the area until the end of the month.
It's not just the weather that causes unrest. It appears that the war in Ukraine is intensifying again. The Russian spring offensive is taking serious shape, according to some experts, land work in parts of eastern Ukraine is becoming difficult. Ukraine also recently carried out a drone attack on the port of Novorossiysk. That is an important port for Russian grain exports. The war premium in the grain price is increased again by trade due to these developments.
Sowing at full speed
In the US, winter wheat has deteriorated slightly, according to the new Crop Progress report from the USDA. 49% of the area receives the status of good or excellent compared to 50% last week. Sowing spring wheat is happening at a rapid pace. Of the planned area, 79% is in the ground compared to 65% in the five-year average for this week. With barley, American growers have sown slightly less far, at 78%. The five-year average is 74%.
Most of the attention from analysts is on corn. The American farmers have stepped up there. Last week it was 49% and this week it is 70%. This puts the growers back in line with the five-year average, which is 71%. Last year, 76% had been sown. The ideal sowing window is approximately the first half of May. Corn can be sown until June 1 without much loss of potential yield, according to experts. When sowing soy, American growers are ahead of the five-year average. 52% has been sown compared to 49% in the five-year average.
Strikes in Argentina are not bad for Brazilian soy processors and exporters. Due to reduced availability of soy oil and soybean meal from Argentina, importers are moving to Brazil. According to Cepea, the price of soy meal has increased by 3%. Soybean oil has risen even faster. Grower prices for soy are less likely to rise. On average, the price that growers receive for soy has increased by about 0,5%.