Analysis Grains
Saudi Arabia secures extra wheat
Europe was left alone on the grain market yesterday. Guidance from the US was largely absent because the exchanges there were closed due to a national holiday. Saudi Arabia secured a third more wheat in a tender than originally intended, and in Russia, the vice governor of Rostov was arrested for embezzlement of agricultural subsidies.
The March contract for wheat on the Matif closed €3.25 lower at €229.50 per ton yesterday. The CBoT was closed yesterday due to President's Day in the US.
The rally in wheat on the American exchange last Friday did not continue in Europe yesterday. The cold weather in the US and Russia - with the risk of winterkill - does not seem to have a real impact on the European market, we can cautiously conclude.
The Saudi Arabian state buyer GFSA announced the results of the tender that closed last Friday. Saudi Arabia has secured 920,000 tons of milling wheat at an average price of about $276 per ton C&F (cost and freight). With this, GFSA has secured significantly more than the intended 600,000 tons that were tendered for.
The ample supply of wheat from the Black Sea region that we saw in the first half of the season is slowly drying up according to various analysts. There are also concerns about the upcoming Russian grain harvest due to the dry autumn and now the cold weather. Some analysts believe that Saudi Arabia securing extra wheat aligns with the view that the wheat market seems to be tightening in the coming months.
Embezzlement
Another remarkable news from Russia is that the vice governor of Rostov has been arrested for abuse of power. The Rostov province is one of the key grain regions in Russia. Konstantin Rachalovksy is said to have embezzled 155 million rubles (approximately €1.6 million) of government funds, as reported by the Russian news agencies Tass and Ria. According to the Russian secret service FSB, this money was intended for agricultural companies. Last year, growers in Rostov were severely affected by weather extremes. Moscow therefore allocated extra funds to support farmers in the province.
Catch-up
In Brazil, farmers can finally speed up the soybean harvesting. Until last Thursday, 23% of the soybean area has been harvested, as announced by AgRural yesterday. Brazilian farmers have harvested 8% of the area in a week. However, compared to the previous season, harvesting is still behind. Last year at this time, 32% of the soybeans had been harvested according to AgRural.
