Analysis Grains & Commodities
Kremlin sees opportunities in grain exports via the Baltic Sea
Russia has ambitious plans for grain exports. Not only does the Kremlin want to export half as much grain by 2030, it also wants to become less dependent on routes across the Black Sea. It was chilly in southeastern Australia. So chilly in fact that the temperature dropped below zero. Definitely not favorable weather for the winter wheat in this region, which has to be threshed in a little over a month. Together with drought in the west of the country, the estimates for the Australian wheat harvest could therefore prove to be far too optimistic.
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Choose the subscription that suits youThe December wheat contract on the Matif closed yesterday €0,75 higher at €221,25 per tonne. On the other side of the big pond in Chicago, grain prices closed in the red. Wheat lost 0,9% to $5.84¼ per bushel. Corn lost 0,5% and the December contract closed at $4.13¼ per bushel. Soybeans were the biggest loser on the CBoT with 1,2% to $10.41 per bushel.
Russia continues to keep European grain traders busy. SocEcon has revised its wheat harvest forecast in Russia slightly downwards to 81,8 million tonnes, down from 82,2 million tonnes in the previous forecast.
Export via the Baltic Sea
The Kremlin announced plans yesterday to increase grain exports. By 2030, Russia wants to export 50% more grain. To achieve this, the country wants to tap into new markets in Latin America and Africa and overhaul logistics. The Kremlin wants to significantly expand export facilities on the Baltic Sea. Russia is currently very dependent on the ports on the Black Sea. Since the war in Ukraine, that route has become riskier. Nevertheless, of the 62 million tons of grain that Russia exported in 2023/24, 90% went via the Black Sea and only 2,4% via the Baltic.
Transport via the Baltic Sea has another advantage over the Black Sea. In the Black Sea and its tributary the Sea of Azov the depth is limited. For transport to the traditional Russian export destinations in the Middle East and North Africa this is not a problem. For transport over longer distances larger ships are required. These can be used on the Baltic Sea. A disadvantage for the Kremlin on the Baltic Sea is that it is surrounded by NATO countries.
Late frost
In Australia, frost has caused damage to winter wheat. In the province of New South Wales, the mercury has dropped to 1,2 degrees below zero in an area with approximately 2 million hectares of wheat. Late in the growing season, frost can cause considerable damage to winter wheat. The wheat harvest in Australia usually starts in November. The exact extent of the damage is still difficult to determine, but could result in a yield that is tens of percent lower, according to various local sources. Drought has been a problem in western Australia for some time now. With the frost in the southeast of the country, the total wheat harvest could well fall well short of the previously predicted 31,8 million tons, according to various analysts.
In the US, concerns about drought are easing somewhat. The growing season for corn and soybeans in the corn belt is more or less over, and dry weather is mainly beneficial for the harvest. The area of wheat in a drought area has decreased, according to the new drought monitor. Half of the winter wheat is in a region where it is too dry, compared to 58% last week. In the heart of the winter wheat belt - northern Texas, Oklahoma and Kansas - it remains extremely dry.