In the Netherlands we had local flooding again last night. In Eastern Europe they could really use some rain. Romania is busy setting up a system to keep drought-stricken farmers on their feet. China and Canada are at loggerheads over electric cars. Canadian rapeseed exports may be dragged into that tug-of-war. The trade is already taking an advance on that.
The September wheat contract on the Matif closed yesterday €0,50 higher at €206,25 per tonne. Most trading is done on the December contract and that also closed €0,50 higher at €217 per tonne. The Chicago exchange was closed yesterday for the US Labor Day.
The US holiday did not completely pass the European market by. All in all, there was little fresh news to really get the market moving. In Eastern Europe, drought is the order of the day. Romania is working on a crop insurance system. This is part of a broader package to help farmers affected by drought. Romania is one of the largest grain exporters within the EU and can count Egypt as one of its largest customers. Long heat waves this season have wreaked havoc in the country.
Compensation
Romanian Agriculture Minister Florin Barbu, in consultation with banks and the financial supervisor, has set up a kind of drought insurance that covers 7 million hectares of agricultural land. Farmers can be compensated up to 3.000 lei (approximately €600) for drought damage. This frees up money and allows growers to borrow money for the coming growing year. Barbu has not disclosed how exactly the system works, when it will be approved or how it will be implemented.
Other measures taken by Romania include a government compensation for drought damage of up to 1.000 lei (around €200) per hectare and a state bank guarantee for affected farmers. The loans of drought-damaged growers will be frozen and they will not have to repay until December 2025.
Import restrictions
The battle for the electric car is not going unnoticed on the grain market. Following the EU and the US, Canada is now also imposing an import duty on Chinese electric cars, steel and aluminium. Just like the EU and the US, China is also coming up with countermeasures. The country has started an investigation into possible dumping practices of Canadian rapeseed and some chemicals on the Chinese market. About half of the Canadian rapeseed harvest goes to China.
Whether the research has had the desired effect as the Chinese government intended is questionable. On the Chinese futures market, rapeseed meal rose to its highest level since early August at 2.375 yuan (around €300) per tonne. On the New York stock exchange, rapeseed fell to $569,70 per tonne. That is a decrease of 4,7% compared to Friday but still above the level of mid-August. The Chinese rapeseed sector is cautiously positive about the research. Domestic demand for edible oil is disappointing and there is more than enough supply according to local sources.