Depressed by the banking crisis and the renewal of Ukraine’s export deal, wheat prices have finally recovered in recent days, buoyed by the stabilization of the financial system and fears of a hardening on the Russian side.
On the market Euronextthe ton soft wheat rose as high as $271.75 on Wednesday, up more than 11% from last week’s low, which was a 14-month low.
“The market is less under the pressure of the banking crisis, making it possible to return to a market a little more open to risk-taking and anticipation,” commented Agritel’s Sébastien Poncelet. In addition, stakeholders are concerned “about the Threat of a possible floor price imposed by Russia on its wheat exports, said Jon Scheve of Superior Feed Ingredients.
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Russian news site Agro Investor reported on Friday that the Ministry of Agriculture could impose a suspension on wheat and sunflower exports due to the recent drop in prices. The Portal agency contradicted the information, according to which the Russian government wanted to set a minimum price in order to ensure sufficient income for the producers and not to prevent exports. The Russian authorities have neither officially confirmed nor denied either information.
“It looks like one market manipulation “Said Damien Vercambre from Inter-Courtage. “While the market had good reason to fall, the Russians are artificially inflating wheat prices. Tensions over Russia were further exacerbated by the decision by American agribusiness giant Cargill to stop contributing to Russian grain exports from the 2023-24 campaign, which begins in July, according to a statement sent to AFP.
Russia’s Ministry of Agriculture assured Portal that the measure will not affect the country’s exports.
The “fear” of Russian peasants
According to Andreï Sizov from the consultancy SovEcon, the quantities of wheat exported by Russia have not decreased and are currently still around one million tons per week. Russian peasants are suffering export tax weight imposed by Moscow, which are around $50 a ton and are eating into their margins, the analyst said. “Russian farmers are very concerned right now,” reports the analyst, to the point that some are considering reducing wheat acreage.
” There was one Tender yesterday from Turkey, for which there was clearly no Russian offer,” notes Sébastien Poncelet. “It’s a bit ambiguous,” and it “keeps the theory and the rumor alive. Maybe they just didn’t get the deal in favor of cheaper Ukrainian wheat.”
“This draws the market’s attention back to the fact that all is not ideal in the Black Sea,” the main export origin of Russian and Ukrainian grain, observes Michael Zuzolo of Global Commodity Analytics and Consulting. On the Ukrainian side, “planted areas are expected to decrease compared to last year,” recalls US Commodities’ Dax Wedemeyer, adding uncertainty factor.
On the Chicago Stock Exchange (CME), the price of SRW (Soft Red Winter Wheat) wheat climbed to $7.24 a bushel (about 27 kg) on Wednesday, a high in more than a year.
The tension on the wheat market is also favored by the corn outbreak, the two grains often develop together. Yellow grain prices are boosted by heat stroke from the Chinese orders in the USA. Since mid-March, China has bought nearly 3 million tons of American corn, accounting for more than 6% of total weed exports from the United States for the current season as a whole.
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For Dax Wedemeyer, however, the market remains cautious annual report by the United States Department of Agriculture (USDA) on acreage in the United States, providing information on the choices American farmers make.
“There are manyuncertainty because of the (production) cost of corn compared to soy,” he explains that the former is much more fertilizer intensive than the latter, noting that several analysts have recently raised their forecasts for soy acreage. “That should give us fireworks on Friday. »
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