Egypt hikes wheat price to build reserves

The rally in the oil market had no effect on the grain market. With a long weekend ahead and an American president who regularly causes surprises, traders and speculators do not want to be stuck in positions, according to some analysts. In the physical market, Egypt is meanwhile forced to raise the wheat price. There is an intervention stock for half a year, but better safe than sorry, according to the Egyptian government. The May contract for wheat on the Matif closed yesterday €1.25 higher at €202.50 per tonne. Wheat also posted a modest gain on the CBoT of ¾ cent to $5.98¼ per bushel. Corn closed 2 cents lower at $4.52¼ per bushel. Soybeans lost 5 cents, bringing them to $11.63½ per bushel. The unpredictability of the American president Donald Trump remains an important factor in the grain market. His speech earlier this week dashed hopes for a quick end to the war. This was especially noticeable in the prices for oil and fuel. Today is Good Friday and the European and American exchanges are largely closed. On Easter Monday Chicago is open but Paris and London are closed. According to analysts, the long weekend creates a dilemma in trading. A lot can change in a few days and traders and speculators do not want to be heavily in long positions contracts bought in the expectation that they will rise. Trump could of course suddenly say that there is a deal with Iran. Because of the wait-and-see attitude in trading, grains did not fully follow the movement that was visible in oil. A third of wheat in drought zone Developments in the Middle East are receiving a lot of attention, but drought in the US is gradually also becoming an increasingly big problem for American arable farmers. Apart from North Dakota, a large part of the American wheat belt has now been coloured in on the latest drought monitor. Last week, 57% of American winter wheat was dealing with drought. This week that has risen to 65% of the area. In the cornbelt the problems are less severe, but still 44% of the area where corn is grown is dealing with drought. Corn still has to be sown for the most part of course. Cotton, which is mainly sown in the southern US, may be the most extreme example, with 94% of the area in a drought zone. Egypt is raising the intervention price for wheat to 2,500 Egyptian pounds per ardeb 150 kilos roughly €267 per tonne. The price was 2,250 to 2,350 Egyptian pounds per ardeb, Reuters reports. The wheat harvest starts in about two weeks in Egypt and with the higher price Egypt wants to increase the strategic wheat stock. The country is doing this because of the high war in Iran. The strategic stocks of wheat, vegetable oils, corn, oil and gas are sufficient to cover six months of consumption, Egyptian Prime Minister Mostafa Madbouly said at a press conference. The Egyptian government would build up two to three months of extra stock. This season Egypt wants to buy 5 million tonnes of wheat grown in the country itself and has the ambition to become self-sufficient from the world's largest wheat importer. Egypt, with around 70 million inhabitants, usually imports around 10 million tonnes of wheat. Costs are rising In Australia, concerns about high fertilizer prices and expensive diesel are increasing further. Urea now costs around AU $1,350 per tonne roughly €807 per tonne. This means that this nitrogen fertilizer has risen in price by around 60% since the start of the war in Iran. The diesel price has risen by 88% over the same period. That has consequences for the cropping plan of the American arable farmer. Nitrogen-hungry crops such as wheat and rapeseed are being replaced by crops that require less nitrogen. Farmers are trying to reduce fertilizer use and are switching from nitrogen-hungry crops such as wheat and rapeseed to feed barley, Dennis Voznesenski, analyst at Commonwealth Bank of Australia, told Reuters. Some are also reducing planted area, but so far this is minimal, he added. The wheat area in Australia could end up 10% to 12% smaller this season according to some analysts due to current market conditions. Last year 12.4 million hectares of wheat were grown. Australia is the world's fourth-largest exporter of wheat and the second-largest exporter of rapeseed.