Analysis Grains & Commodities
Cold causes logistical problems in Russia
It's cold in Russia. For the grain market, this is primarily causing problems with the transport of grain to the export ports, according to market bureau Ikar. Damage from wintering out has been limited so far, according to the bureau. In the US, however, wheat took a significant hit. This is partly related to broader developments in the financial markets. In Brazil, the soybean harvest is going very well. Nevertheless, AgRural warns that the weather is not ideal for the later soybean fields.
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Choose the subscription that suits youThe March wheat contract on the Matif closed yesterday down €0,75 at €193,50 per tonne. On the CBoT, wheat closed 10 cents lower at $5.27¾ per bushel. Corn also closed lower, but its loss was limited to 2 cents at $4.25¾ per bushel. Soybeans fell 4 cents to $10.60¼ per bushel.
The weather premium on wheat is definitely not building up any further. Ikar raised the price for Russian wheat by $2 to $231 per tonne FOB (delivered on ship). The market bureau attributes the higher price to logistical problems. Due to the cold weather in Russia, traders are having difficulty getting wheat from storage to growers in Black Sea ports.
You might expect that cold weather to damage the wheat for the upcoming harvest. Some local sources reported last week that due to the lack of snow, winter grains in southwestern Russia are susceptible to frost damage. According to Ikar, the wintering process is not yet an issue. The weather is being closely monitored but hasn't yet caused significant problems in Russia, according to Ikar.
Stronger dollar
The USDA's weekly wheat export figures, at 12 million bushels (approximately 327.000 tons), were right in line with analysts' expectations. In total, the US exported 613 million bushels (approximately 16,7 million tons) of wheat. This puts exports 7% ahead of the USDA's forecast for the current season, and nearly 100 million bushels (approximately 2,7 million tons) more were exported compared to the same period last season.
Despite brisk exports, wheat took a hit on the CBoT yesterday. According to some analysts, this is inextricably linked to developments in the financial markets. The dollar rose and oil took a step back. Both factors dampened sentiment in the grain market. We can cautiously conclude that the cold weather in the US is not seen as a major risk to wheat in the market.
Heat
In Brazil, the soybean harvest is proceeding without any major setbacks so far, according to AgRural. Ten percent of the soybean acreage has been harvested this week, compared to 9 percent last year. The market bureau does advise monitoring the weather forecast for the southern province of Rio Grande do Sul. Very hot weather is forecast there, which could impact yields in late-ripening soybeans. This is also affecting late-sown soybeans in the provinces of Parana, Santa Catarina, and southern Mato Grosso do Sul.
The harvest of the first crop of corn is behind last season. Of the area harvested this season, 10% has been harvested, compared to 14% this week last year. Sowing the next crop of corn is progressing more smoothly. Of the planned area, 13% is in the ground, compared to 9% this week last year.
