In Europe, the wheat market is not experiencing major shifts for the time being. According to some analysts, this should be the case in order to compete with Russia. The minimum prices that the Kremlin set together with the exporters are not being adopted by the market. In the slightly longer term, the stocks available for export at various major players could well attract more attention.
The December contract for wheat on the Matif closed yesterday €0,50 higher at €216,25 per tonne. On the Chicago exchange, grains took a step back. Wheat was the biggest loser and closed 1,2% lower at $5.65½ per bushel. Corn saw its losses limited to 0,2% and ended at $4.30 per bushel. Soybeans closed 0,5% lower at $10.11¾ per bushel.
Russia is and remains the price fighter on the wheat market. Market bureau Ikar lowered the quotation for Russian wheat by $5 to $228 per ton. That is well below the minimum price of $245 per ton that the Russian Ministry of Agriculture agreed with the exporters. The price reduction did not really help Russian exports last week. According to SovEcon, Russia exported 770.000 tons of grain last week, of which 720.000 tons were wheat. A week earlier, Russia exported 1,2 million tons of grain, of which 1,12 million tons were wheat.
Advantage of weak euro
According to analysts, the fact that wheat in Paris held up reasonably well – especially when compared to the decline in Chicago – is mainly due to the decline of the euro. The European currency fell to its lowest rate since November 2022. The lower rate is a boost for European exports. If Europe wants to compete with Russian wheat on the major sales markets in North Africa and the Middle East, the European wheat price would have to take another step back.
An additional uncertainty in the wheat trade is what Trump will do about the war between Ukraine and Russia. If the US president were to succeed in getting both sides to the negotiating table and signing a ceasefire or even a peace treaty, grain exports from both countries could get a boost, some experts say.
Lead in export
Another group of analysts points out that both countries have already exported relatively large amounts of grain. Since the start of the export season on 1 July, Ukraine has exported 15,3 million tonnes of grain, according to new figures from the Ukrainian Ministry of Agriculture. This means that exports are 52% ahead of last year. More than half of Ukrainian grain exports, namely just under 8 million tonnes, are wheat. This means that wheat exports are 60% ahead of last season. APK-Inform maintains the harvest forecast for grain in Ukraine at 52,5 million tonnes. According to the agency, 37,3 million tonnes of this harvest are available, compared to 51 million tonnes that were exported a season earlier. Relatively tight stocks were also noted in the Wasde report of last Friday. The closing stocks of wheat at several large exporters are at their lowest level in decades.
While the grain market in Europe is getting some support from currency fluctuations, American exporters are suffering from a strong dollar. The US dollar rose to its highest point in four months. American grain, and especially wheat, was already relatively expensive on the world market and is therefore becoming even more expensive for countries outside the US. Furthermore, wheat was under some pressure due to precipitation on the prairies in the US. This is resolving drought in the winter wheat area of the US and the rain is of course good for the development of winter wheat in the country.
In corn and soy, several speculators are taking their profits in the last trading session after the rally last week, according to several analysts. The somewhat more negative mood was further reinforced by a drop in the oil price. This is mainly due to concerns about weak demand from China. The faltering economy there is again food for speculation about the consequences of a possible trade war with the US.