Russian wheat on the rise due to low supply

The March wheat contract on the Matif closed yesterday €0,25 higher at €229,75 per tonne. On the CBoT, wheat closed 0,8% higher at $6.04¾ per bushel. Corn was slightly more strongly on the rise during the last trading session and gained 1,2% to $5.02 per bushel. Soybeans, in contrast to grains on the Chicago exchange, moved more sideways and held on a plus of 0,2% to $10.38½ per bushel.

The cold in the US and Russia continues to provide a constant undertone in the grain market. In both America and Russia, snow preceded the cold front and large-scale wintering is therefore not immediately an option. Not everywhere there is the same amount of snow, so there will be some frost damage locally according to experts. In the central southern part of Russia, the mercury will drop to 19 degrees below zero according to the Russian meteorological service. Ikar is lowering the yield forecast for the upcoming Russian harvest by 1 million tons to 129 million tons. This reduction is the result of the cold and frost damage that the weather has most likely caused.

Weather extremes
The entire growing season has been dominated by weather risks for Russian growers, partly as a result of climate change, Russian Agriculture Minister Oksana Lut said at the 'Global grain and pulses forum' in Dubai. For the current export season (2024/25), she is keeping the export forecast the same as the previous forecast of 55 to 57 million tonnes. For comparison: a season earlier, Russia exported 72 million tonnes of grain, according to the ministry's data.

The fact that the supply of grain from Russia is drying up is also reflected in Russian prices. Ikar increased the quotation for Russian wheat by $2 compared to last week to $247 per ton FoB (delivered on the ship). "Prices have risen mainly due to a sharp drop in supply," writes Dmitry Rylko in a commentary on the quotation. SovEcon increased its price for Russian wheat by €1 to $242 to $246 per ton. According to SevEcon, Russian exporters need significantly higher prices to achieve an acceptable margin. Despite the Russian export quotas that came into effect on February 15 and bad weather in the Black Sea ports, which is causing problems for shipping, the price of wheat in Russia is on the rise. Export margins remain thin, writes SovEcon.

Incomplete
The fact that less wheat is coming from Russia is not reflected in the European export figures. Up to and including 16 February, the EU has exported 13,3 million tonnes, according to the export figures of the European Commission. Last week, less than 300.000 tonnes of wheat were exported. Last year this week, the export counter was at 20,8 million tonnes. So we are 36% behind last season. In part, this lower export is due to disappointing yields last harvest in Europe and competition from the Black Sea region. One point of irritation is that the data from the European Commission is incomplete. There have been problems with the delivery of data from Bulgaria and Ireland since 2023, the data from France has been incomplete since 2024 and now we have not had a complete overview from Italy for ten weeks.

The weather in South America is making its mark on the corn and soybean market. A drier period in eastern Brazil means that growers can get started with the harvest of soybeans and the sowing of corn. In Argentina, the weather is less cooperative. The rain of last weekend helped somewhat, but in large parts of the pampas it remains dry. According to sources, the moisture supply in the soil is around the lowest level in six years. Rain is only expected in the north of Argentina for the coming week. Major changes in the corn and soybean situation are therefore not expected.