Analysis Grains
Russian wheat not yet ready for winter
On the stock exchange in Paris, wheat was on the rise during the last trading session. This is while wheat in the EU is relatively in good condition according to the latest Mars bulletin. There are more concerns about winter grains in Ukraine and Russia. Due to a dry autumn, the condition is moderate and winter wheat has not hardened yet. A dream start is exaggerated, but there have been worse times with soybeans in Brazil. It is still early in the growing season, but a record harvest could be on the way according to Cepea.
The March contract for wheat on the Matif closed €4 higher at €233.50 per ton yesterday. Wheat on the CBoT declined slightly and closed 0.4% lower at $5.50 per bushel. Soybeans decreased even more than wheat, dropping by 0.6% to close at $9.82 per bushel. Corn closed 0.7% higher at $4.45 per bushel.
On the stock exchange in Paris, wheat was on the rise, which is somewhat remarkable. The starting position for winter wheat in the EU is actually not that bad. At least that's what the JRC - the scientific bureau of the European Commission - states in the December edition of the Mars bulletin. In most parts of the EU, last month was mild in terms of temperature, and the rain was not as heavy after a fairly wet start to the new growing season earlier this autumn. Farmers have had the opportunity to sow the last pieces of winter grain. And what has been sown is generally relatively well developed.
Wintering
Around the Black Sea, the JRC is concerned about the condition of winter grains. "Sowing and early growth of winter wheat was severely hindered by a very dry cultivation layer. This inhibited growth and resulted in a very moderate stand of winter crops," according to the Mars bulletin. Due to this moderate start, winter wheat in eastern Ukraine and southern Russia is not yet sufficiently winter-hardy. In central Europe, the wheat has also not hardened yet, but the crop is healthier, making it more resilient according to the JRC. A colder period at the end of November did little damage in Central Europe according to the JRC, partly due to the combination with snow. In southern Russia and eastern Turkey, there is light to moderate damage in the late-sown winter grains.
The Russian wheat price is on the rise. Ikar raised the quotation for Black Sea wheat by $6 to $234 per ton. This gives European and American exporters some confidence again. The Russian grain stock as of December 1 was 21% smaller than a year earlier. According to the Russian statistics bureau Rosstat, there were 31.1 million tons of grain including legumes and corn in Russian storage on December 1. A year earlier, it was 39.4 million tons. The biggest decrease was in wheat, with the stock being 25% lower, namely 18.7 million tons compared to 24.8 million tons.
Saudi Arabia has purchased 804,000 tons of wheat in a tender for $262.50 to $269.89 C&F (cost and freight). Exporters from almost all over the world participated in the tender. The EU, the Black Sea region, North and South America, and Australia were represented. Saudi Arabia intended to secure 595,000 tons of wheat but ultimately bought over 200,000 tons extra. According to sources, Romania, Bulgaria, and some South American countries are expected to deliver the bulk. One or two shipments from Russia are also expected.
Good harvest forecast depresses price
Despite a good demand for soybean oil, the Brazilian research institute Cepea is not very optimistic about the soybean price in the upcoming season. Especially for biodiesel production in Brazil and the US, Cepea foresees a healthy demand for soybean oil. Due to a reasonably favorable progress of the growing season in South America, a record harvest is expected in Brazil, for example. A good harvest generally does not bode well for prices. For corn, the institute expects the market to stabilize and even rise in the coming weeks due to limited supply. This is mainly because it will take some time before the new harvest reaches the market.
