Panic is a big word, but wheat took another step up in the last trading session. On both the Paris and Chicago stock exchanges, wheat closed at the highest level in over three months. Russia is the driving force behind the rally. The price fighter on the wheat market is said to be considering export-restricting measures.
The December wheat contract on the Matif closed yesterday €6,25 higher at €233,75 a tonne. On the CBoT, wheat closed 2,7% higher at $6.15¼ a bushel. Corn got a tail-end of the rally in wheat, rising 0,8% to $4.32½ a bushel. Soybeans, on the other hand, gained some ground in the last trading session, closing 0,1% lower at $10.56 a bushel.
It is the Black Sea region that is attracting attention in the grain market. It is well known that it is dry in the east of Ukraine and the west of Russia. Yesterday, this was emphasized once again by the Russian meteorological service. Due to a lack of rain, the growing conditions in various wheat areas are much worse than usual, according to the Russian weather service.
Exporters call for export restrictions
According to the Russian Union of Grain Exporters, exports in the first quarter of the 2024/25 season are running very smoothly. Too smoothly for the umbrella organization's liking. An estimated 17 million tons of grain were exported in the first three months, the vast majority of which was wheat. For comparison: over the entire 2023/24 season, Russia exported 55,4 million tons of wheat. SovEcon estimates that Russia has a total of 47,6 million tons of wheat available for export this season and the USDA is calculating 48 million tons. The fact that grain exporters fear that they will run out of stock at this rate is not unjustified in this regard.
It is in a way remarkable that grain exporters look to the government to regulate wheat exports. The effect on the market is predictable. Possibly less relatively cheap Russian wheat has a price-raising effect. You can also wonder whether Russian exporters could not have brought their prices more in line with their European counterparts. It is clear that the Kremlin has a big finger in the pie in grain exports. The interests clash here. On the one hand, the Kremlin wants the exporters to get orders and thus money. On the other hand, they also have an interest in the highest possible prices on the world market.
Egypt on the hunt for wheat
The other big news on the wheat market is also indirectly related to Russia. According to various sources, the Egyptian state buyer Gasc has reached an agreement to import 500.000 tons of wheat per month from November to April. The grain from the Black Sea region is likely to come from Russia. Egypt would thus import around 3 million tons of wheat from Russia in the coming six months.
In August, Egypt attempted to secure 3,8 million tons of wheat at a competitive price in a monster tender. That failed. All in all, only a large 260.000 tons were registered for that tender. Now, Gasc seems to have succeeded in securing a large volume, albeit over a longer period.