The US president's unconventional diplomatic efforts to end the war in Ukraine have so far been largely unsuccessful. In fact, tensions in the Black Sea region are actually rising slightly. A tender from Algeria for milling wheat has also contributed to a slightly more bullish sentiment. Due to rain in Brazil, corn and soybeans came under some pressure during the recent trading session.
The December wheat contract on the Matif closed yesterday €2 higher at €193 per tonne. On the CBoT, wheat remained unchanged at $5.37¾ per bushel. Corn declined slightly, closing 6½ cents lower at $4.31½ per bushel. Soybeans fell 9 cents to $11.15¾ per bushel.
US envoy Witkoff's visit to Moscow this week failed to achieve a breakthrough in ending the war in Ukraine. Russian sources called the talks useful and constructive, but the occupied territories remain a major stumbling block. On a positive note, the parties are continuing to talk. However, this has far from alleviated the tension. Putin has already issued several threats to European countries should they "provoke" Russia.
Support from outside NATO
A boost for Ukraine is that Australia and New Zealand have pledged to contribute financially to military equipment for Ukraine. This makes these countries the first non-NATO members to contribute financially to the Ukrainian war effort. The fact that Australia and New Zealand are also blacklisting several new ships suspected of belonging to the Russian shadow fleet is a sensitive issue for the Kremlin. Putin has suggested that he might disrupt Ukrainian shipping as a countermeasure. This would have direct consequences for grain exports.
Less good news for Ukraine came from Brussels. European Commission President Ursula von der Leyen wants to transfer frozen Russian assets held by European institutions to Ukraine. Belgium is now putting the brakes on these plans. This involves a total of approximately €210 billion in frozen Russian assets in Europe, of which €185 billion is held in Belgium. Belgium fears it will face repercussions if the Kremlin takes legal action against the European Commission's plan. Belgian Foreign Minister Maxime Prévot says the risks are clear. "If Russia takes us to court, it has every chance of winning, and we, Belgium, will not be able to repay those €200 billion, because that's equivalent to an entire year's federal budget. It would mean bankruptcy for Belgium."
Price war
In addition to the tensions between Ukraine and Russia, a tender from Algeria also created a somewhat more bullish mood, especially on the European wheat market. The North African country purchased an as-yet-unknown quantity of milling wheat. Estimates vary, but according to some sources, Algeria may have secured up to 900.000 tons of wheat. Prices have not been officially announced, but some sources are citing a level of around $256 per tonne C&F (freight forward). The wheat is believed to be coming from the Black Sea region and Argentina.
Argentina has meanwhile taken over from Russia as a price fighter on the global market. According to SovEcon, the price of Russian wheat has fallen by about $4 since mid-November, to between $228 and $230 per ton. Argentine wheat exporters are now reportedly trading at about $20 below the Russian price. Argentina's competitive wheat pricing is not a matter of luxury. According to the latest forecasts, the country has a record wheat harvest. However, there are also reports from various quarters that the quality of the wheat is poor, and Argentine exporters are therefore forced to lower prices to attract buyers.
Corn and soybeans were a bit down last trading session, according to various sources, due to the weather forecast for Brazil. Rain is forecast for central and northern Brazil, which could nicely replenish soil moisture reserves.