Wheat prices climb amid war and drought

It is not a spectacular rise, but wheat prices took a small step up in both Europe and the US. The war in Iran is of course playing an important role in this. In addition, the drought in the US is also starting to affect the market. Maize stood out in the grains complex in the latest trading session. The May contract for wheat on the Matif closed €0.50 higher yesterday at €203.75 per ton. Wheat also took a modest step up on the CBoT, rising 2 cents to $6.07 per bushel. Maize closed in the red on the Chicago exchange and ended 6¼ cents lower at $4.55¾ per bushel. Soybeans traded sideways and managed only a small gain of half a cent to $11.59¾ per bushel. The unrest in the Middle East remains a more important factor on the grains market. The Wall Street Journal reports today based on sources that US President Donald Trump wants to end the war with Iran. Trump would even be willing to end the war if the Strait of Hormuz remains closed. Trump reportedly discussed scenarios with his advisers over the past few days, but no decision has yet been made according to the American newspaper. An early end to the war did not seem very likely yesterday based on statements by the US president. Trump said he would 'wipe out' Iranian energy installations if a deal is not reached with Iran soon. According to Trump, 'most' of his 15-point peace plan is accepted. Iran would also have agreed to let twenty ships pass through the Strait of Hormuz over the next ten days. The fact that an oil tanker under Kuwaiti flag was hit by a projectile overnight off the coast of the United Arab Emirates does not exactly improve market confidence in a swift end to the war. According to Kuwait, it concerns an Iranian attack. Food security According to various insiders, it is mainly wheat that is receiving support from the war in Iran. Strategic wheat stocks play an important role in safeguarding food security. Maize and soy are partly pulled along by wheat, and due to high energy prices, these crops are more attractive for biofuel production, which creates additional demand. The Ikar quotation for Russian wheat remained unchanged at $238 per ton FOB (delivered on board). Meanwhile, Russian wheat exports are running smoothly. Ikar expects March exports will end up at the upper end of the forecast range. That would mean exports of 4.6 million tons of wheat. In the US, the wheat trade is also paying close attention to the weather. Especially on the southern prairies, where a lot of hard red wheat is grown, the crop is suffering under warm and especially dry conditions. Rain is forecast for the coming days, but according to weather models it will not reach western Kansas, Oklahoma and Texas. Maize the weaker performer Maize was the weaker performer during the past trading session. According to some analysts, that is notable. Oil is, after all, well above $100 per barrel and the USDA announced yesterday that 145,000 tons of maize were sold to an unknown destination. The reason maize is lagging behind could lie in the acreage expectations that the USDA will publish tonight European time. A Reuters poll shows that traders and analysts expect maize acreage to decline less than currently anticipated. Maize is a relatively expensive crop for the American arable farmer and, partly due to sharply higher fertilizer prices, various market agencies expect soy to gain preference somewhat faster. In Argentina, maize seems to be doing well this year. The Buenos Aires grain exchange is keeping the harvest forecast unchanged at 57 million tons. That puts the Argentines well above the 52 million tons that the USDA is counting on. 15% of the maize acreage has now been harvested.