Analysis Grains & Commodities
Grain is not following the oil market trend
Following the American and Israeli attacks on Iran that began last Saturday, yesterday was the first day of trading on the stock markets. Brent crude closed up over 6%, and European natural gas futures even rose by 35%. The grain market didn't follow this energy trend. In fact, prices in both Paris and Chicago took a step back. This is somewhat surprising, as there was quite a bit of bullish news. In Europe, winter grains suffered damage due to wet and cold weather, as reported in the Mars bulletin.
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Choose the subscription that suits youThe March wheat contract closed yesterday down €2 at €195,50 per tonne. On the CBoT, wheat took a harder hit, closing 16¾ cents lower at $5.74½ per bushel. Corn closed 5½ cents lower at $4.33¼ per bushel. Soybeans were down 7¼ cents at $11.50 per bushel.
In the Netherlands, wheat appears to have emerged from the winter relatively unscathed. This is by no means the case everywhere in Europe. In western France, the Iberian Peninsula, and Italy, there are concerns about flooding, according to the new Mars Bulletin from the JRC, the scientific bureau of the European Commission.
Cold is a problem in much of northern and western Europe. In northern Germany, Scandinavia, and central Ukraine, the mercury dropped to around minus 15 degrees Celsius during two cold spells in the first half of February. Despite only a thin layer of snow, the JRC estimates the risk of frost damage to winter grains to be low. This is different in eastern Poland, the Baltic States, and western Ukraine. Locally, temperatures of 25 to 30 degrees Celsius were measured. "Under such conditions, frost damage is very likely, despite a sufficiently thick layer of snow, as has been observed in large parts of this region." However, according to the JRC, the actual damage will only become visible later in the season.
According to the Ukrainian National Academy of Agricultural Sciences, up to 20% of winter crops may have been lost due to the extreme cold in the country in February. Nevertheless, scientists call the condition of winter grains in Ukraine "relatively acceptable."
Saudi Arabia has reportedly secured 800.000 tons of wheat in a tender. Prices range from $265,60 to $283 per tonne, freight paid. According to sources, the wheat is coming from Russia or other suppliers around the Black Sea.
Conflicting messages
Two conflicting reports emerged yesterday regarding the Brazilian soybean harvest. Market bureau Safras & Mercado lowered the yield forecast from 179,28 million tons to 177,72 million tons. If this yield is achieved, it would still be a record. "There have been specific yield adjustments, particularly in the state of Rio Grande do Sul, due to climate stress," Safras & Mercado wrote. The market bureau expects 105 million tons of the harvest to be exported and 60 million tons to be processed in Brazil.
Rabobank, on the other hand, raised its yield forecast for soybeans in Brazil by 2 million tons to 181 million tons. "Crop conditions were assessed as good to excellent in most growing areas, which led RaboResearch to raise its production forecast," the bank wrote. Rabobank expects to export 112 million tons of soybeans this season.