Unrest in the Black Sea region is increasing. Russia fired missiles at the port of Odessa and Ukraine seized a ship loaded with grain from Sevastopol. Copa-Cogeca expects the smallest wheat harvest since 2018 for this season. However, these reports do not seem to have much influence on the market.
The September wheat contract on the Matif closed €5,25 lower at €220,75 per tonne. On the CBoT, wheat closed 1,9% lower at $5.43½ per bushel. Corn showed a modest plus of 0,7% last trading session, reaching $5.43½ per bushel. Soy lost 1,7% to close at $11.41¼ per bushel.
All in all, a rather strange situation is emerging on the wheat market. Expectations for the coming harvest in Europe are not great and the weather is not cooperating. The market simply does not or hardly respond to this. Yesterday, the European association of farmers Copa-Cogeca released the yield forecast for the European wheat harvest. The total wheat harvest is estimated at 117,5 million tons compared to 125,5 million tons last season. If that prediction comes true, it would be the smallest wheat harvest since 2018.
Quality problems
In Western Europe it doesn't want to get dry either. In France, threshing takes place in fits and starts between showers. That is separate from what the rain does to the quality of the wheat. It is hot and dry in Russia. Ideal weather for the harvest. The first harvest results are not too bad in Russia. The protein content is lower than expected. According to some analysts, this could mean less Russian wheat available for export that meets the 12,5% protein standard.
The battle in Ukraine is also flaring up. There are reports that Russia has launched a missile attack on the port of Odessa. A truck driver and security guard are said to have died. Ukraine has seized a cargo ship sailing in the Odessa region, according to Reuters. The captain of the ship has been taken into custody. The ship flying the flag of a Central African country is said to have loaded 'looted' grain in the port of Sevastopol, the Ukrainian secret service SBU reports.
According to the SBU, the ship's crew helped Russia export grain from the occupied southern part of Ukraine to the Middle East. “The investigation is still ongoing to establish all the circumstances of the crime and identify other persons involved in the illegal activities,” Reuters quoted the SBU as saying.
Warm weather
For corn and soy, the US is mainly looked at. The temperature in the cornbelt will rise into the 30s in the coming days. That is not ideal for the crops that flower or plume there, but there is sufficient moisture in the soil. This is due to the rain that the remnants of Hurricane Beryl brought yesterday. The plants can therefore benefit from this according to local sources. It will only become a concern if it remains dry in the second half of July.
This Friday, the USDA will release the July edition of the Wasde report. Major changes are not expected by analysts in the report. There will be a light bearish undertone expected in the report. This is mainly due to the relatively good wheat harvest in the US and the good condition of corn and soy in that country.