Analysis Grains
Offers of Black Sea grain shows cracks
About the offer of relatively cheap grain from the Black Sea region, there is still a lot going on. Ukrainian grain exports are booming. The Ukrainian Ministry of Agriculture warns that the country cannot sustain this pace. The Russian Ministry of Agriculture has kept the yield forecast for that country unchanged and acts as if nothing is wrong. The governor of the Rostov region opposed this. He expects the harvest in this important region to be 30% lower compared to last season.
The December contract for wheat on the Matif closed €3 higher at €223 per ton yesterday. On the CBoT, December wheat closed 0.9% higher at $5.79¼ per bushel. Corn also showed a slight increase and closed 0.1% higher at $4.04¾ per bushel. Soybeans, in terms of increase, were between the grains and rose 0.3% to $10.00½ per bushel.
The supply of relatively cheap wheat from the Black Sea region continues to be a topic of discussion. Yesterday, the Ukrainian Ministry of Agriculture released new export figures. Up to September 11 in the current season, 8.2 million tons of grain have been exported compared to 5.4 million tons last season. This season's export figure for Ukraine includes 4.3 million tons of wheat, 2.5 million tons of corn, and 1.2 million tons of barley.
Whether Ukraine can maintain this export pace is doubted. Despite the war in the country and the drought this season, the expected wheat harvest in Ukraine of around 22 million tons is approximately the same as last season. The major difference from last season, however, is that there was a relatively large stock of wheat then due to export problems a year earlier. The total export last season reached 18.3 million tons. This season, Ukraine does not want to export more than 16.2 million tons of wheat. Prices for wheat from Ukraine are likely to rise as a result, according to various sources.
Bad weather costs Russia tons of grain
Further east in Russia, things are also unsettled. The Russian Ministry of Agriculture maintains the grain harvest forecast at 132 million tons and exports at 60 million tons. There is more than enough wheat for domestic use, emphasizes the ministry. Preventing price increases in the domestic market seems to be the government's main goal. The governor of the Rostov region does not follow this line. Vasily Golubev announced that 1 million hectares have been affected by bad weather. Due to frost relatively late in the spring followed by drought, it is expected that the harvest in Rostov will be 30% lower than last season. Last season, Rostov accounted for 11% of Russian grain production. The governor has asked the Russian government to stop mandatory loan repayments for farmers until 2025.
Yesterday, Russian President Putin announced that he wants to explore the possibilities of restricting the export of nickel, titanium, and uranium. Wheat or other agricultural goods were not mentioned during the video conference with government officials. Putin suggested that the export of other products could also be limited as long as Russian interests are not harmed. Some analysts are therefore not confident that grain will be spared.
Advance on Wasde
Tonight, Dutch time, the USDA will release the September edition of the Wasde report. Analysts expect a slight reduction in the harvest forecast for corn and soybeans in the US. However, most interest is in what the USDA will do with the wheat harvest in the EU. France and Germany have lowered their harvest figures in the past period, and market players more or less assume that the USDA will follow that trend. After Russia, the EU is the second-largest wheat exporter in the global market.
