The weather is becoming more central to the grain market. Rain is forecast for the dry Black Sea region. However, this does not have the positive effects on winter grains that one would hope for. In South America, concerns about the soybean situation are also increasing due to a lack of moisture.
The March wheat contract on the Matif closed yesterday €1,50 higher at €232,75 per tonne. On the CBoT, wheat also closed in the green, gaining 0,3% to $5.48¼ per bushel. Corn took a step back, closing 0,4% lower at $4.52¼ per bushel. Soybeans closed 0,2% higher at $9.82 per bushel in the last trading session.
Rain is forecast for eastern Ukraine and southern Russia in the coming days. At first glance, this seems like good news for these areas, which have been plagued by drought all autumn and winter. The Russian Meteorological Institute warns that precipitation could seriously deteriorate the condition of winter grains. The combination of moisture and above-average temperatures means that grains continue to grow during the winter. However, new sprouts are sensitive to frost, warns the Russian State Weather Service. If the weather changes later this winter, the damp weather could still cause considerable problems.
The price of Russian wheat is on the rise. Ikar increased the quotation this week by $3 to $237 per ton. Egypt was the most important buyer of wheat from Russia in the first half of the export season (from July to December). This is according to the Russian news agency Interfax based on data from Rusagrotrans. Egypt imported 5,3 million tons of wheat in the past six months. This is 1,8 times the import over the same period a year earlier. Egypt announced last Friday that it had secured enough wheat to last until the end of June. Bangladesh is Russia's largest customer after Egypt with 2,14 million tons. Turkey is in third place. With 2,08 million tons, Turkey imported 33% less wheat compared to the same period last year.
Drought in Argentina
Soybeans have received some support from ongoing drought in Argentina. Little to no rain is forecast for much of the country for the next two weeks. The Buenos Aires grain exchange has reduced the expected soybean area in Argentina by 1,1% to 18,4 million hectares. Margins are under pressure in soybean cultivation, which is why growers are opting for other crops. Incidentally, 85% of the planned soybean area has been sown, according to the Buenos Aires exchange.
Setbacks in Argentina do not necessarily have to be a major problem for the availability of soy. Several analysts point out that soy is doing well in Brazil. The USDA agricultural attaché estimates the upcoming harvest in Brazil at 165 million tons. Last season, Brazil harvested 153 million tons of soy, according to the USDA in the latest Wasde report.