The downward trend on the wheat market came to an end yesterday. Less rain is forecast for the Black Sea region than previously expected, which made wheat market players nervous. Drought is not a problem in France. There is actually an excess of water there, as a report from the French Ministry of Agriculture showed again yesterday. The USDA will release the Wasde report later today. Analysts expect adjustments, especially for South America.
The September wheat contract on the Matif closed €7,50 higher yesterday at €246,50 per tonne. On the CBoT, wheat also showed recovery. The July contract closed 3,1% higher at $6.26½ per bushel. Corn and soy took a step back last trading session. Corn gave up 0,5% to close at $4.49¼ a bushel. Soy lost 0,9% to $11.78 per bushel.
The wheat market is a weather market, as became clear again yesterday. The weather models predict less rain than previously predicted in the Black Sea region and that did not miss the effect on the wheat market. An important wheat region in Russia, Rostov, declared a state of emergency yesterday due to drought. The news from Russia didn't stop there. The chairman of the Russian Association of Grain Traders estimates that 15% to 30% of Russia's winter grain area has been damaged by the frost in early May. That is a much higher percentage than the Russian Ministry of Agriculture mentioned. The Kremlin talked about 1 million hectares with frost damage, which amounts to approximately 4% of the winter wheat area.
Wet and cold spring
The weather is not cooperating in France either. You probably know the story: it is wet, cold and there is little sun. According to the French Ministry of Agriculture, 45% more rain fell than average in the months of March, April and May combined. In addition, there were 20% fewer hours of sunshine and it remained relatively cool. Ideal conditions for the development of mold. The ministry estimates the winter barley harvest in France at 8,6 million tons. That is 10,7% less than last season. The yield estimate for rapeseed is 4,2 million tons, a decrease of 1,2% compared to last season.
Ukraine must respect the EU's wishes
Ukraine should not pick a fight with the EU over the export of agricultural products. This call comes from a striking source, namely Andriy Verevskyi, the owner of the Ukrainian agricultural conglomerate Kernel. Kernel is one of the largest exporters of sunflower oil in the world and a major player in other agricultural products. "I don't think Ukraine should fight with Poland or other European countries over import duties and the protection of the European market," Verevskyi told the Financial Times. "We have plenty of other export markets like India, Africa, Asia, China and so on and I don't think we should jeopardize the relationship between Europe and Ukraine over agricultural products."
The wish of Poland and other eastern member states to protect their own market by banning the import of products from Ukraine must be respected by Kiev, according to Verevskyi. Ukraine must seek cooperation in areas that are more important. Several (eastern) EU member states have played an important role in supplying weapons and taking in hundreds of thousands of refugees.
Was the
Tonight Dutch time the USDA will release the May edition of the Wasde report. Analysts do not expect major changes for corn and soy production in the US. It is still too early for definitive acreage figures, so the USDA will probably postpone major adjustments for a month. Shifts are expected for South America. In Argentina, an adjustment in corn is expected due to drought. In the April edition of the Wasde, the USDA made hardly any adjustments to the Brazilian soy harvest due to the floods in Rio Grande do Sul. Some analysts now expect a correction.