Unrest surrounding Iran keeps the wheat market in flux, as price pressure and supply alternate. At the same time, Russian exports are growing despite higher prices. Read more about wheat prices and Russian exports.
The May wheat contract on the Matif closed €3,50 lower yesterday at €201,25 per ton. On the CBoT, the loss on wheat was even greater than in Paris. On the Chicago exchange, wheat closed 3% lower at $5.97½ per bushel, dropping 18¾ cents. This means wheat has fallen below the psychological $6 mark. Corn also closed in the red, but the loss here was limited to 3½ cents, falling to $4.54¼ per bushel. Soybeans lost 2½ cents, bringing the price to $11.68½ per bushel.
According to some analysts, the fact that wheat in particular took a significant step back is due to Trump's televised address. The broadcast was yesterday evening US time, after the markets closed. The market had cautiously assumed that the US president might announce a swift end to the war in Iran.
As we have come to expect from Trump, his message was just slightly different from what various analysts had anticipated. According to the American president, almost all of the war's goals have been achieved and the war is nearly over. Nevertheless, the US is going to 'hit them extremely hard' over the next two to three weeks, Trump stated. "We are going to send them back to the Stone Age, where they belong." These are not exactly statements that suggest a speedy end to the unrest in the Middle East.
Trump's speech has not lessened the unrest in the commodity markets. At the time of writing, Brent crude is up 7% this morning. It is difficult to predict what will happen to grains, but they are expected to rise along with them.
Russian exports are picking up
It sounds contradictory, but rising grain prices are paying off for Russian grain exports. Analysts at the Russian railway company Rusagrotrans expect Russian wheat exports for the month of March to head towards the monthly record currently standing at 4,89 million tonnes for March 2024. Rusagrotrans is forecasting exports of 4,85 million tonnes for the past month, compared to 4,65 million tonnes last week. By comparison, the five-year average for March stands at 2,9 million tonnes.
In total, 37,7 million tonnes of wheat have been exported by Russia during the current season. Last season, the total for the same period stood at 36,3 million tonnes. Egypt is the largest buyer of wheat from Russia with 7,6 million tonnes, followed by Turkey with 5,8 million tonnes. In third place is Iran with 1,9 million tonnes.
For the upcoming harvest, the weather outlook in Russia is reasonably favorable. In the Central Federal District (the European part of Russia bordering Belarus and Ukraine), the snow has all but disappeared according to Rusagrotrans. In the Volga region, this will take until mid-April. In the southern districts of Russia, winter grains continue to grow steadily and the first summer grains are emerging.
Small acreage and drought in the US
A plentiful supply of wheat on the world market continues to determine market sentiment, partly due to relatively good growing conditions in the Black Sea region and Europe. Quite a bit came from the US. bullish news, but it is having only a limited impact on the market. The total wheat acreage in the US, at 43,775 million acres, is the smallest in a hundred years, according to the acreage forecast released by the USDA earlier this week. Couple that with the drought gripping major wheat states like Kansas and Oklahoma, and the chances of a large wheat harvest in the US do not seem particularly high.