Wheat exporters from Russia have new competition

The unconventional diplomatic efforts of the American president to end the war in Ukraine have been little successful. In fact, the tension in the Black Sea region is actually increasing. A tender from Algeria for malt wheat has also contributed to a somewhat more bullish sentiment. Due to rain in Brazil, corn and soybeans were slightly under pressure during the last trading session. The December contract for wheat on the Matif closed yesterday €2 higher at €193 per tonne. On the CBoT, wheat remained unchanged at $5.37¾ per bushel. Corn took a step back and closed 6½ cents lower at $4.31½ per bushel. Soybeans lost 9 cents, bringing the price to $11.15¾ per bushel. The visit of the American envoy Witkoff to Moscow this week did not bring a breakthrough for ending the war in Ukraine. Russian sources described the talks as useful and constructive, but the occupied territories remain a major sticking point. To take a positive point from it: the parties are still in conversation with each other. However, the cold air is far from gone. Putin has repeatedly issued threatening remarks towards European countries should they 'provoke' Russia. Support from outside NATO A boost for Ukraine is that Australia and New Zealand have pledged financial support for military equipment for Ukraine. Thus, these countries are the first non-NATO members to provide financial contributions to the Ukrainian war effort. That Australia and New Zealand are also blacklisting a number of new ships that are presumably part of the Russian shadow fleet is a sensitive point for the Kremlin. Putin has suggested that he might disrupt Ukrainian shipping as a countermeasure. This would have direct consequences for grain export. Less good news for Ukraine came from Brussels. The president of the European Commission, Ursula von der Leyen, wants to transfer frozen Russian assets at European institutions to Ukraine. Belgium is now putting the brakes on these plans. In total, this concerns about €210 billion in frozen Russian assets in Europe, of which €185 billion is held in Belgium. Belgium is afraid it will bear the brunt if the Kremlin takes legal action against the European Commission's plan. The Belgian Minister of Foreign Affairs, Maxime Prévot, says that the risks are clear. If Russia challenges us in court, it has every chance of winning and we, Belgium, cannot repay that €200 billion, because that corresponds to a whole year's federal budget. It would mean bankruptcy for Belgium. Price war Besides the tensions between Ukraine and Russia, a tender from Algeria also led to a somewhat more bullish sentiment, especially in the European wheat market. The North African country has indeed purchased an unknown quantity of malt wheat. Estimates vary somewhat, but according to some sources, Algeria may have secured up to 900,000 tonnes of wheat. Prices have not been officially disclosed, but some sources mention a level of around $256 per tonne C&F (cost and freight). The wheat is expected to come from the Black Sea region and Argentina. Meanwhile, Argentina has taken over the role of price fighter from Russia on the world market. According to SovEcon, the price of Russian wheat has dropped by about $4 since mid-November to $228 to $230 per tonne. Argentine wheat exporters are now said to be around $20 below the Russian price. That Argentina is aggressively pricing its wheat in the market is not out of luxury. According to the latest projections, the country is expecting a record wheat harvest. However, there are also reports from various sources that the quality of the wheat is poor, and Argentine exporters will need to adjust prices to attract buyers. During the last trading session, corn and soybeans were reportedly under pressure according to various sources due to weather reports for Brazil. Rain is forecasted for central and northern Brazil. This could nicely replenish moisture in the soil.