Sufficient supply of relatively cheap wheat from the Black Sea region has determined the mood on the market in recent months. This could change in the near future. The Kremlin seems to be increasingly interfering with exports and Ukraine is also working on a new system for minimum export prices. Incidentally, Russia does not only have great ambitions in the area of wheat.
The December wheat contract on the Matif closed yesterday €0,50 lower at €219,25 per tonne. On the CBoT, wheat closed 0,5% higher at $5.73¼ per bushel. Corn closed 0,5% lower at $4.11½ per bushel. Soybeans were the biggest gainer on the Chicago exchange, closing 1,2% higher at $9.76½ per bushel.
Russian wheat exports are going well in October and are on track for a monthly record of 5,9 million tons. However, SovEcon has lowered the total export forecast for this season by 1,7 million tons to 45,9 million tons. If this is achieved, it would be the smallest Russian export in three seasons. SovEcon cites the interference of the Russian ministry as the reason for the reduction. According to the market agency, the Kremlin's idea to raise prices will therefore not be without consequences.
Not only Russia is trying to influence prices on the world market, Ukraine is also working on a system of minimum export prices. According to Ukrainian Minister of Agriculture Vitaliy Koval, the new system will be operational from the beginning of December.
Weather market
That corn took a step back in the last trading session in Chicago is somewhat unexpected. According to analysts, demand for corn is good and with the recovery of the oil price, you would expect extra support for corn. The reasonably good yields of corn in the US and the smooth harvest are putting pressure on the market, according to some analysts.
In South America, the weather remains favorable for sowing soy and corn. An alternation of rain and dry days allows the seed drills to continue to move and the crops in the ground develop quickly, according to local sources.
China is a major buyer of soy in South America. However, the Chinese Ministry of Agriculture is seeking rapprochement with a less obvious supplier. China is said to want to help develop the soy industry in Russia. According to the latest forecasts, Russia will harvest a record 7,3 million tons of soy this year. Whether Russia will really make a difference remains to be seen. China itself harvests around 20 million tons of soy annually and consumption is around 120 million tons. Russia still has a long way to go before it can really compete with the US, Brazil and Argentina in the area of soy.