The grain market felt a bit more friendly to sellers last trading session. A few substantial purchases boosted confidence. The war in Ukraine continues to cause considerable uncertainty. Players in the grain market are currently showing little confidence in the peace plans for Ukraine and Russia. One factor putting some price pressure is the progress of the harvest in Australia and Argentina. The wheat there is looking good this season.
The December wheat contract on the Matif closed yesterday €0,50 higher at €189,25 per tonne. Grains also closed higher on the CBoT. Wheat rose 1¾ cents to $5.29 per bushel. Corn rose more convincingly, rising 8¼ cents to $4.31¾ per bushel. Soybeans were somewhere between the grains, rising 6¾ cents to $11.31½ per bushel.
Demand for grains boosted the sentiment on futures markets during the recent trading session. According to various sources, the Turkish state-owned procurement company TMO purchased 300.000 tons of wheat for milling. Reportedly, the wheat originated in Russia, and TMO did not purchase it through a tender process, but through a direct deal.
South Korea has also secured a reasonable volume of wheat. A wheat processor purchased 91.000 tons of wheat from the US. Another Korean company purchased 40.000 tons of spring wheat from Canada. No prices have been disclosed for the US order, but $260 per tonne was paid FOB (delivered on the vessel) for the wheat from Canada for delivery in March/April.
Honour existing commitments
China has purchased ten shiploads of soybeans from the US since Tuesday. This followed a phone call between Trump and Xi. The US president urged his Chinese counterpart to import more from the US, a move Xi more or less agreed to. According to sources, the soybean purchases are worth approximately $300 million. US soybeans are somewhat more expensive than those from Brazil. There is talk of a $0,50 premium per bushel for North American soybeans compared to Brazilian ones. Some analysts consider this a nice gesture from China just before Thanksgiving (which is celebrated in the US today).
Since the end of October, China has purchased a total of approximately 3,5 million tons of soybeans from the US. According to Trump, China has pledged to buy 12 million tons of soybeans for the 2025/26 season. This means that this pledge has been fulfilled by approximately 30%.
Peace is still far away
Closer to home, the war in Ukraine continues to cause unrest in the grain market. Ample grain availability in Russia and Ukraine is creating a market ceiling. We saw this earlier this week in Saudi Arabia's tenders. However, these grains must be able to be transported to buyers. This could well lead to further pressure.
Russia and Ukraine are carrying out targeted attacks on infrastructure. Ukraine warns that Russia's attacks on the Ukrainian railways, in particular, are causing problems with grain transport. While there is talk of a ceasefire or peace between Russia and Ukraine, the proposal, in which the Americans have taken a minor lead, is doubtful whether it will be adopted.
The wheat harvest is underway in the Southern Hemisphere. Combine harvesters are harvesting wheat in both Australia and Argentina. The Rosario grain exchange is expecting a record wheat harvest in Argentina of 24,5 million tons. The Australian wheat harvest isn't breaking any records yet, but as the harvest progresses, local sources report excellent yields. Estimates for the total wheat harvest range from 34,5 to 37 million tons.