Analysis Grains
Wheat is holding its ground in turbulent grain market
The grain market has two faces. In the wheat market, tensions around the weather and the safety of grain ships in the Black Sea are creating a fairly stable mood. In corn and soybeans, slightly tempered geopolitical tensions and good threshing weather in the US are putting some pressure on prices.
The December contract for wheat on the Matif closed €1.25 higher at €229.75 per ton yesterday. Wheat also closed higher on the CBoT, namely 0.4% higher at $5.94¾ per bushel. Corn lost some ground in the last trading session and closed 1.2% lower at $4.20¾ per bushel. Soybeans were the biggest decliner at 1.7%. The November contract closed at $10.16¼ per bushel in Chicago.
Tensions in the Black Sea region set the tone in the wheat market. The potential consequences of the Russian rockets hitting two grain ships earlier this week are still lingering. Furthermore, the drought in the region is a cause for concern. Despite the unfavorable conditions, Ukrainian farmers have made significant progress in sowing winter grains. According to the Ukrainian Ministry of Agriculture, 2.88 million hectares of winter grains have been sown, which is 55% of the planned area. Winter wheat is by far the largest crop, with 2.62 million hectares sown out of the planned 4.5 million hectares.
Backlog increasing
In the EU, wheat exports are lagging behind last season. Currently, 6.35 million tons have been exported compared to 8.9 million tons in the same period last season. The backlog is increasing. Last week, the EU exported 26% less compared to a year earlier, and this week it is 29% less. Given the moderate wheat harvest in much of the EU, this is not really surprising.
Allegedly, Algeria has secured 360,000 to 390,000 tons of wheat in a tender. Sources indicate that it is milling wheat from the Black Sea region with an average price of around $262 per ton C&F (cost and freight). Jordan has a tender for 120,000 tons of wheat open but has not made a purchase.
No golden week for corn
Corn and soybeans were under some pressure in the last trading session. According to analysts, this is partly due to developments in the oil market. Crude oil dipped slightly as the situation in the Middle East became less tense. This makes corn less attractive for ethanol and soybeans less attractive for biodiesel. China, a major buyer in the global market, is also staying quiet for now. A buying spree after the 'golden week' (commemorating the founding of the People's Republic of China) which lasted from October 1 to 7 this year, has not materialized so far.
Favorable weather for threshing corn and soybeans in the American corn belt is also putting some pressure on the market. American farmers are making good progress with the soybean harvest. With 47% of the area harvested, this is the largest soybean acreage harvested at this time in seven years.
The EU is fairly active in the soybean market. Until October 6, 3.27 million tons of soybeans have been imported, which is 3.5% more than last season. The lead in soybean meal imports is even greater at 8%. In total, the EU has imported 4.63 million tons of soybean meal.
