Wheat war premium is being reduced

The peace negotiations between Ukraine and Russia continue to keep players in the grain market occupied. The US is increasing pressure on both the Kremlin and Kiev. The grain market seems to be sensitive to this. The Ukrainian farmers' union UAC is meanwhile ringing the alarm that the recent attacks by Russia are disastrous for Ukrainian grain exports. The March contract for wheat on the Matif closed €0.50 lower yesterday at €185.25 per tonne. This is the lowest closing price since early September. Also at the CBoT, wheat took a hit during the last trading session, closing 3¼ cents lower at $5.06¼ per bushel. Corn did close in the green at the Chicago exchange with an increase of 4 cents to $4.40½ per bushel. Soybeans lost 4½ cents, reaching $10.58¼ per bushel. Sufficient supply and moderate demand is and remains the story of the wheat market. There seems to be no change in this in the short term. Where is the bottom? That is a question many analysts are asking themselves. The USDA did not help the sentiment yesterday. The ministry announced that the Chinese order of 132,000 tonnes of wheat from the US has been canceled. It has not been officially confirmed, but various sources report that China has likely canceled the more expensive American wheat and instead secured cheaper Argentine wheat. Progress Negotiations for peace are ongoing between Ukraine and Russia. Assessing how these negotiations will unfold remains difficult, but they do seem to be getting serious. The US is reportedly considering a sanctions package against Russia if the Kremlin continues to reject all attempts at a peace deal, according to Bloomberg. The White House is said to be backing a security guarantee for Ukraine that resembles Article 5 of NATO (an attack on one is an attack on all). However, the areas occupied by Russia in eastern Ukraine remain a hot topic for which, according to sources, there is not a quick solution. Although players in the wheat market are reducing the war premium somewhat, Ukrainian exporters are having great difficulty getting their wheat shipped. This is at least the warning from the Ukrainian farmers' union UAC. Due to the attacks on port terminals and power plants, facilities are operating poorly at limited capacity. Some terminals on the Black Sea are completely idle, and others are operating at 20% capacity, writes the UAC. In the first half of December, 359,150 tonnes of wheat have been exported out of the 1 million tonnes that have been contracted/sold, according to the UAC. Traders don't know what to do. It's dangerous to store grain in the port, and logistics are not functioning well. There are constant power outages and train issues. This season, Ukraine has exported 13.8 million tonnes of grain compared to 19.4 million tonnes during the same period last season, according to new figures from the Ukrainian authorities. Wheat, with 7.6 million tonnes, is the main export product this season. Snowstorm In the US, the weather is causing some inconvenience with a snowstorm in the northern prairies. However, it is not expected that the cold conditions will cause problems with the wintering of wheat. In fact, temperatures are expected to rise above average in most of the US towards the weekend. Drought in the southern prairies, especially in Kansas and Oklahoma, could provide some support in the wheat market, some experts suggest.