Wheat prices are receiving support from geopolitical unrest and drought in the US, while corn lags behind despite exports and high energy prices. Read more about price developments on the grain market.
The May wheat contract on the Matif closed €0,50 higher yesterday at €203,75 per ton. On the CBoT, wheat also made a modest upward move of 2 cents to $6.07 per bushel. Corn closed in the red on the Chicago exchange, closing 6 cents lower at $4.55 per bushel. Soybeans moved more sideways, staying at a gain of half a cent to $11.59 per bushel.
The unrest in the Middle East remains a major factor in the grain market. The Wall Street Journal reports today, citing sources, that US President Donald Trump would like to end the war in Iran. Trump is reportedly even willing to end the war if the Strait of Hormuz remains closed. Trump is said to have discussed scenarios with his advisors over the past few days, but a decision has not yet been made, according to the American newspaper.
A speedy end to the war did not seem very likely yesterday, judging by statements made by the American president. Trump announced that he would 'wipe out' Iranian energy installations if a deal with Iran is not reached in the short term. According to Trump, he is accepting 'the majority' of his 15-point plan for peace. Furthermore, Iran reportedly agreed to allow twenty ships to pass through the Strait of Hormuz over the next ten days. The fact that a Kuwaiti-flagged oil tanker off the coast of the United Arab Emirates was struck by a projectile last night does not exactly boost market confidence in a speedy end to the war. According to Kuwait, it was an Iranian attack.
food security
According to various insiders, it is primarily wheat that is receiving support from the war in Iran. Strategic wheat reserves play an important role in ensuring food security. Maize and soybeans are partly pulled along by wheat, and due to high energy prices, these crops are more attractive for the production of biofuels, which creates additional demand.
The Ikar quotation for Russian wheat remained unchanged at $238 per ton FOB (delivered on the ship). Meanwhile, exports of Russian wheat are running smoothly. Ikar expects exports in March to come in at the upper end of the forecast range. That would mean exports of 4,6 million tonnes of wheat.
In the US, the wheat trade also pays close attention to the weather. Particularly on the southern prairies, where a lot of hard red wheat is grown, the crop is suffering from warm and especially dry conditions. Rain is forecast for the coming days, but according to weather models, it will not reach western Kansas, Oklahoma, and Texas.
Corn is different
Corn was somewhat of the weak link during the last trading session. According to some analysts, this is remarkable. After all, oil is standing well above $100 per barrel, and the USDA announced yesterday that 145.000 tonnes of corn were sold to an undisclosed destination. The reason corn is lagging somewhat could lie in the acreage forecast that will be published by the USDA this evening, Dutch time.
A Reuters poll indicates that traders and analysts expect the corn acreage to decline less than anticipated. Corn is a relatively expensive crop for American farmers, and partly due to sharply rising fertilizer prices, various market agencies expect soybeans to be preferred somewhat sooner.
In Argentina, corn appears to be doing well this year. The Buenos Aires grain exchange is keeping the harvest forecast unchanged at 57 million tons. This puts the Argentinians significantly above the 52 million tons the USDA is counting on. 15% of the corn acreage has now been harvested.