The supply of grain from the Black Sea region is getting tighter. Yesterday, the Russian Minister of Agriculture put her two cents in. However, she mentioned very different figures than the chairman of the Russian Grain Union earlier this week. The corn-soy market is dominated by the weather forecasts for South America. The plans for import duties that the new US Treasury Secretary came up with seem to be ignored by the market.
The March wheat contract on the Matif closed yesterday €3,50 higher at €232,50 per tonne. In Chicago, wheat was more buoyant than in Paris. On the CBoT, wheat closed 3,2% higher at $5.62½ per bushel. Corn also moved up 2,4% to $4.97 per bushel. Soybeans, like grains, closed in the green, rising 1,5% to $10.60½ per bushel.
Russian Agriculture Minister Oksana Lut expects Russia to export 2024% less grain in the 25/20 season than last season. The minister estimates the export potential this season at 57 million tons compared to 72 million tons last season, she told an agricultural conference in Moscow. In the first half of the season, 37 million tons of grain were exported, according to Lut. In order to have enough grain for the domestic market in the second half of the season, the export quotas have been reduced by almost 70%.
For the 2025 harvest, the grain area will be expanded by 1 million hectares to 84 million hectares. The Kremlin has set up a support program of 42 billion rubles (around €410 million) in the form of short-term loans to farmers. According to Lut, 82% of winter grains in Russia are doing well.
Market is less positive
With this, the Russian Minister of Agriculture paints a completely different picture than Arkady Zlochevsky, the chairman of the Russian Grain Union. Earlier this week, Zlochevsky spoke of grain exports of 47 to 48 million tons and spoke of 37% percent of winter grains that are doing moderately or poorly.
LSEG leaves the yield forecast for the upcoming wheat harvest in Russia unchanged at 80,3 million tonnes, but warns of weather risks. There is little snow in the Caucasus provinces. This was not a problem in the past two weeks due to relatively mild weather and the coming two weeks also seem to be fine with mild temperatures in prospect. "Any cold spells later in February could lead to considerable damage to winter cereals, especially in regions that are not completely covered by snow," writes LSEG.
Ukraine exported 25,35 million tons of grain this season, compared to 23,15 in the same period last year. The final stock of wheat for Ukraine is estimated to be around 25% lower compared to last season. This is seen by analysts as another signal that the supply of grain from the Black Sea region is getting tighter.
Weather forecasts for South America
Corn and soybean prices are mainly driven by weather forecasts for South America. Further reductions in harvest forecasts are not ruled out for Argentina due to drought stress in the crops. In Brazil, growers are worried about rain at the start of the harvest.
The funny thing is that the increase in a broad import tariff of 2,5%, which is increased every month, which Scott Bessent (the US Treasury Secretary) came up with and which Trump wants to implement from next Saturday, hardly has any effect on the grain market. Apparently the trade assumes that a compromise will be found before the deadline to avert a trade war.