Analysis Grains
Black Sea wheat export pace is very high
Wheat was on the rise during the last trading session. Drought in the US and the Black Sea region fueled the market bulls. The high export pace of Ukraine and Russia provided additional momentum. Soybeans took a step back, partly due to news from South America.
The December contract for wheat on the Matif closed yesterday €2.75 higher at €219.75 per ton. On the CBoT, wheat closed 2.1% higher at $5.70¾ per bushel. Corn also closed in the green, but the increase was limited to 0.7% compared to wheat. Corn ended at $4.13¾ per bushel. Unlike the grains, soybeans took a step back. The November contract closed 0.9% lower at $9.65¼ per bushel.
Drought in the US is back on the radar in the grain trade. Winter wheat is off to a slow start, with only 38% of the acreage rated good or excellent in the Crop Progress report. This is the second-worst rating for winter wheat since 1986 when the USDA began tracking this statistic.
Some rain is forecasted for the eastern Ukraine, southern Russia, and western Kazakhstan where it is dry. However, the predominantly dry weather pattern is not expected to change according to weather services. Planting of winter grains is slower than usual due to the drought. Similar to the US, concerns exist here about the condition of the planted wheat.
Jordan has finally secured wheat after several unsuccessful tenders. According to sources, the country has purchased 60,000 tons of wheat for $269 per ton C&F (cost and freight) for delivery in early January. Jordan had a tender open for 120,000 tons.
Export slowdown?
The EU has exported 7.26 million tons of wheat so far this season, which is 33% less compared to the previous season. Ukraine has exported 6.1 million tons of wheat through September this season, according to UkrAgroConsult. If the preliminary export figures for October are added, Ukraine would have exported half of the wheat available for export in the first four months of the season. UkrAgroConsult notes that a significant amount of wheat has been exported early in the season, not only by Ukraine but also by Russia. This increases the likelihood of export restrictions by Black Sea countries, according to the market agency.
Brazilian soybean farmers catching up
In Brazil, soybean farmers have made significant progress in planting. According to AgRural, 36% of the planned area has been planted. This was 18% just last week. By this time last year, 40% of the planned soybean area had been planted. For the first corn crop, 52% has been planted according to AgRural. This is almost the same as the 53% planted by this week last year. The first corn crop accounts for about 20% of the Brazilian corn harvest. 75% of the corn harvest is second crop after soybeans.
