Attacks on ships pose a risk to the grain trade

The wheat market showed a small correction yesterday, but underlying there is still quite a lot of tension in the market. Access to wheat from the Black Sea region remains a sensitive issue due to the attacks by Russia and Ukraine. Meanwhile, there is also still something going on in the Red Sea. In Europe and the US, drought also remains a factor that the market takes into account. The September contract for wheat on the Matif closed yesterday €1.25 lower at €243 per tonne. On the CBoT, wheat slipped back below $7 per bushel yesterday and lost 9½ cent to $6.96¼ per bushel. Corn gained 2 cent and came to $4.64 per bushel. Soybeans closed 4½ cent higher at $12.37½ per bushel. The wheat market briefly showed a small correction after the rise earlier this week. Fundamentally, however, the situation remains tense. Russia and Ukraine continue to carry out attacks against each other. That does not seem likely to change in the short term. Ukrainian president Zelensky issued a message saying he expects Russia to intensify attacks on grain ships in order to hinder Ukraine's exports. Things are not getting any calmer in the Middle East either. Houthi rebels have attacked two Saudi oil tankers in the Red Sea. There is concern that the conflict between Iran and the US will expand further. Trump would be considering a major attack on Iran. 'Bigger than ever before', as in the well-known rhetoric of the American president. Brent oil broke through $100 per barrel yesterday because of this news. The effect on the grain market remains limited for now. From various sides it is emphasized that a high oil price forms a foundation under the grain market. Problems in the Red Sea may also have consequences for grain exports from Europe and the Black Sea region to Asia Weather remains and will remain an important factor. Some rain is forecast for parts of Europe next weekend, but after that the warm weather will return. According to the weather models, the warm air could reach far into eastern Europe. For wheat that will no longer make the difference, but there are concerns about later crops such as corn. In the American midwest and the eastern cornbelt temperatures are around normal, while in the western cornbelt it is warm. At least as important is that it is dry. Of the spring wheat in the US, 25% is now in a drought area compared with 24% last week, according to the new drought monitor. The winter wheat acreage in drought areas fell from 48% last week to 47% this week. The Wheat Quality Council has now visited northern North Dakota in the crop tour. The spring wheat there is on average doing better than in the south of the state. The average yield for the north of the state comes to 48 bushel per acre compared with 47 bushel per acre last year.