Analysis Grains
Quality of Australian wheat endangered by rain
The expected yield of wheat in Australia is good. Whether the wheat will then come in neatly is another story. Rain during the harvest is definitely not good for the quality of the wheat. Ukraine has a taste for wheat exports. Despite the war, the routes on the Black Sea remain open.
The December contract for wheat on the Matif closed €1.25 higher at €213.50 per ton yesterday. Wheat on the CBoT also showed a cautious increase and closed 0.2% higher at $5.38 per bushel. Corn closed 0.3% lower at $4.22 per bushel. Soybeans showed a slightly sharper decline, losing 0.8% to close at $9.83¾ per bushel.
Ukraine has exported 8.96 million tons of wheat from July to November, according to UkrAgroConsult based on preliminary figures. This means Ukraine has exported 55% more wheat so far this season compared to the same period last year. "The share of destinations in Asia has significantly increased due to the stable sea corridor," the agency writes in the explanation of the figures. Indonesia, Vietnam, and Thailand are among the top 5 major buyers. Spain remains the largest buyer of wheat from Ukraine. "Due to the expansion of Russian and even Ukrainian wheat flows, wheat exporters in the EU are focusing more on the West African market. France and Germany partially adapted to the growing competition in Algeria by selling more to Morocco and Nigeria," notes UkrAgroConsult.
Rain during Australian harvest
Due to a smooth export in the first months of the season for both Ukraine and Russia, it is expected that there will be less wheat available for export in the second half. Analysts' attention is therefore shifting more towards what is happening in the southern hemisphere. Abares earlier this week set the yield expectation for wheat in Australia at 31.9 million tons. However, the wheat still needs to be harvested neatly. The weather is not cooperating entirely as rain has fallen in southeastern Australia and according to weather models, more rainfall is expected in the coming week. Rain in ripe crops is not good for quality. Some analysts warn that this may result in more wheat being used as feed wheat.
There has been unrest in the Black Sea region and the Middle East for a long time. And as if that wasn't enough, there is also turmoil in South Korea. President Yoon attempted a covert coup, which failed. Most of us may not immediately see a connection between South Korea and the grain market, but there is indeed one. The country is a major importer of agricultural commodities on the world market. South Korea is a significant buyer, especially for corn. Some analysts believe that the political unrest is undermining confidence in the market. Coincidentally or not, the USDA announced yesterday that 30,000 tons of soybean oil from the US will go to South Korea. However, this did not provide much support to the soybean market.
