There is some talk of peace between Russia and Ukraine, but nothing concrete has been achieved yet. This became clear yesterday after Zelenskyy's visit to Trump. Meanwhile, the attacks between Ukraine and Russia on ships and port infrastructure are having some impact on the grain market. The weather is another factor. After a relatively mild Christmas in the US, a real cold snap may now be on the way.
The March wheat contract on the Matif closed €1,25 higher at €190,25 per tonne last trading session. On the CBoT, wheat closed 2¾ cents lower at $5.19 per bushel. Corn also took a step back, closing 1 cent lower at $4.50 per bushel. Like grains, soybeans also fell, losing 4½ cents to close at $10.58¾ per bushel.
Ukrainian President Zelenskyy visited US President Trump in Florida last weekend. Both men are optimistic about an agreement ending the war in Ukraine. According to Zelenskyy, security guarantees are the key to long-lasting peace. No concrete statements were made about how these guarantees will be implemented. The other major point of contention remains the Donbas. Russia claims this entire zone in eastern Ukraine, including unoccupied areas. Zelenskyy now appears willing to discuss a demilitarized zone in the Donbas. Prior to Zelenskyy's visit, Trump spoke with Putin by phone. All in all, a peace deal in the Black Sea region remains largely unsettled.
New quota
Russia's export targets are concrete. Last week, Moscow announced the export quotas for the final part of the current export season. Between February 15 and June 30, 20 million tons of grain may be exported. Last season, the quota for this period was set at 10,6 million tons. It should be noted, however, that maize and barley were not included in this quota last year, but are this season.
Russia aims to export 53 to 55 million tons of grain this season. Russian grain exports have been moderate so far this season. Margins are thin due to low global grain prices and a stronger ruble. Exports of wheat, the most important grain product, are slow. Exports in the first few months of the season are down about 30% compared to last year. Russia hopes grain exports will pick up once global prices rise somewhat. Global grain prices rose slightly this month due to attacks on Russia and Ukraine's ships and port infrastructure. This caused considerable concern about security of supply and risks related to grain exports from the Black Sea region.
Cold approaching
The weather is another factor that may cause some unrest in the grain market in the coming days. According to weather models, cold air will move into the EU and the Black Sea region at the beginning of January. Wheat won't be able to winter out immediately, especially in areas with snow. Further afield in Russia, frost damage is a concern, according to some sources.
Cold weather is also a concern for analysts in America. Last week, record-high temperatures were recorded in the US. Now, a cold front is moving across Canada. If that cold weather moves further south to the American prairies, it could cause damage. Due to the relatively warm weather last week, wheat is susceptible to wintering out, according to several local sources.