The wheat market is a barrel of contradictions. Cold weather is predicted for the American prairies and the Black Sea region. However, the market is not yet nervous about possible frost damage, because in both regions snow precedes the cold. The American plans for peace between Ukraine and Russia are also not going unnoticed.
The March wheat contract on the Matif closed yesterday €4 lower at €232 per tonne. On the CBoT, wheat also took a step back, closing 0,5% lower at $5.74¼ per bushel. Corn was up in the last trading session, closing 1,3% higher at $4.90¼ per bushel. Soybeans were in the red, falling 1,5% to $10.27¾ per bushel.
Colder weather is forecast for the coming weekend, both on the US prairies and in the Black Sea region. The mercury will drop so low that frost damage is imminent. According to the Ukrainian meteorological service, the risk of wintering wheat is limited, as snow is falling in most areas where it gets cold. Similar news is coming from the US. According to American weather forecasters, the cold air will be preceded by a storm that will bring enough snow to protect wheat in the Midwest and the Plains from the cold. Only in the far south of the US do some analysts express concern that winter wheat is suffering from drought stress and may not be sufficiently protected from possible cold.
Black Sea wheat remains profitable
European wheat exports continue to falter. According to the latest figures from the European Commission, the EU has so far exported 13,0 million tonnes of wheat, compared to 20,4 million tonnes last season. Barley exports are 19% behind last season at 2,9 million tonnes. Compared to the Black Sea region, European wheat is on the expensive side. As both Russia and Ukraine have exported relatively large quantities of wheat in the first half of the season, supply is not yet drying up. Players on the grain market are struggling with the question of how to interpret the telephone conversation between Trump and Putin. It quickly became clear that Trump is somewhat unconventional, to say the least. However, it is still difficult to estimate what possible American plans for peace in Ukraine mean for, for example, Russia's access to the world market.
Sanctions hang over the market
In the soybean trade, there is less confidence in Trump's trade policy. China has secured several shipments of soy from Argentina this week. This is quite unusual for this time of year. According to some analysts, China is testing the availability of soy in Argentina to avoid having to buy from the US, in anticipation of possible counter-sanctions against the US.
Market bureau Patria unexpectedly lowered its soybean harvest estimate in Brazil by 2 million to 165,9 million tons. According to the bureau's analysts, yields outside the Mato Grosso province are lower than previously expected. Abiove, however, kept its yield forecast for Brazil unchanged at 171,7 million tons. Earlier this week, the USDA was between Patria and Abiove at 169 million tons.
Corn was not affected much by the soybean and wheat downturn. A sale of 130.000 tons of corn from the US to an unknown destination and a fairly tight ending stock gave corn support, according to several analysts. The world ending stock is the smallest in 10 years.