After a period in which wheat yield forecasts in Russia and Ukraine were only revised downwards, things are not getting worse for a change. In Ukraine, the grain traders' association has spoken out strongly against plans for minimum export prices. The association fears that this could seriously hamper exports. Biodiesel is becoming increasingly important for Brazilian soy growers. There are simply limits to what the main importer, China, wants in soy, according to the leader of the Brazilian soy processors.
The September contract on the Matif closed yesterday €3,25 lower at €226,55 per tonne. On the CBoT, wheat closed 1,6% lower at $5.72¾ per bushel. Soy, like wheat, closed 1,6% lower at $11.55¼ per bushel. Corn took the hardest hit yesterday, closing 2,3% lower at $4.39¾ per bushel.
Wheat is the weak brother in the grain complex. In Europe and the Black Sea region, export prices in particular are under some pressure. In the US, the good start to the grain harvest has a less positive effect on price developments. Rain in Kansas has slowed the harvest train, but the state is still about ten days ahead of the multi-year average. The moderate mood on the wheat market is further reinforced by yield forecasts. Ikar has adjusted the harvest forecast for wheat in Russia from 81,5 million tons to 82 million tons. In itself this is not a shocking change, but after a period in which expectations were only adjusted downwards, this takes some getting used to.
Rapeseed on the rise?
Ukrainian grain exports in the 2023/24 season are almost 2 million tons ahead of last season and, according to the latest update from the Ukrainian Ministry of Agriculture, are at 49,3 million tons. So far in June, 2,3 million grains have been exported compared to 2,1 million tons in the same period last year. The price for rapeseed in Ukraine will rise in the coming months. At least that is what the Ukrainian agricultural society predicts. The current price is approximately €425 per tonne and will rise to €500 in October. For growers who have not yet committed rapeseed, they will simply have to wait and see for the alliance's advice.
The Ukrainian Union of Grain Traders UGA warns of the consequences of the minimum grain prices for exports that the Ukrainian Ministry of Agriculture is considering. On the one hand, Ukraine wants to increase income related to the export of agricultural products, but is also not blind to the criticism from Europe from farmers who believe that they are faced with unfair competition. As a solution, Ukraine has thrown a ball and worked out minimum export prices for wheat, corn, soy and rapeseed, among others. This could not be introduced until August at the earliest. The UGA is not happy with such a system. “It will have a very negative impact on the ability of exporters to meet their obligations, undermine confidence in Ukrainian exporters, complicate the planning and financing of export activities and at the same time reduce the competitiveness of Ukrainian goods on world markets,” the UGA wrote . According to the association, it could cost up to half of Ukrainian exports.
Diesel will be the salvation for soy
Biodiesel is becoming increasingly important for the Brazilian soy sector, according to Andre Nassar, chairman of Abiove, a Brazilian interest group for soy processors. "I do not expect that we will grow 1 million hectares more of soybeans here in Brazil every year to meet the demand from China," Nassar told the journalists present during a trade fair. China is trying to become less dependent on imports and the recent hassle with export duties in Brazil is not doing any good to exports. Nassar expects that the demand for soy from China will remain stable in the coming years at approximately 100 million tons from various countries. Brazil is now the most important soy supplier to China. Biodiesel is an important branch for selling the additional soy production in Brazil.