The unrest in the Black Sea region is once again having a hold on the wheat market. Besides attacks on energy infrastructure, Putin also has the ports of Odessa in his sights. After Ukrainian drone attacks on the Russian shadow fleet, Putin already warned of this, and that doesn't seem like an empty threat. In Russia, farmers' enthusiasm for wheat cultivation has waned. Small margins are a major cause of this.
The March wheat contract on the Matif closed yesterday €1,50 higher at €188,75 per tonne. On the CBoT, wheat rose 5¾ cents to $5.15½ per bushel. Corn closed 3¼ cents higher at $4.47 per bushel. Soybeans, like grains, were also in the green, rising 4 cents to $10.53¼ per bushel.
The Russian attacks on Ukraine's Odessa region are causing unrest, especially in the wheat market. According to Ukrainian President Zelenskyy, the Kremlin is trying to cripple Ukraine's maritime logistics. Last Monday, a civilian ship was damaged in a Russian attack on the port of Odessa. Earlier this month, Putin threatened to restrict Ukraine's access to the Black Sea after Ukrainian drone attacks on the Russian shadow fleet.
Margins are insufficient
The moderate wheat prices are also affecting Russian growers. SovEcon expects the winter wheat area for the upcoming harvest to reach 16,1 million hectares. This was 16,2 million hectares last year and 16,9 million hectares in 2023. The peak in Russian wheat acreage occurred in 2021, when 17,8 million hectares of winter wheat were sown. The spring wheat area is expected to shrink by 400.000 hectares compared to last season, to 10,7 million hectares, SovEcon predicts. "The profitability of grain cultivation has been declining in recent years," writes the market agency. SovEcon cites the flexible export duties Russia has imposed on wheat, among other commodities, as one of the reasons for the smaller wheat acreage. These duties were implemented to control prices on the domestic market, but they also result in lower margins for growers.
Germans prefer barley and rapeseed
Slightly more winter wheat has been sown in Germany, according to preliminary figures from Destatis. However, growth of 0,3% compared to 2,9 million hectares is very limited. The areas of winter barley and rapeseed both increased by 4,9% to 1,3 and 1,1 million hectares, respectively.
Egypt has reportedly purchased 700.000 tons of wheat. The state-owned purchasing company, Mostakbal Misr, did not issue a tender for this, but reportedly bought the wheat through private transactions. The wheat comes from countries including Ukraine, Russia, Bulgaria, and France.
AgRural has raised its soybean harvest forecast in Brazil by 1,9 million tons compared to the November estimate, to 180,4 million tons. The agency anticipates a yield of 3,67 tons of soybeans per hectare. Therefore, based on AgRural's estimate, the drought reported by some local sources will have little effect on soybean yields.