Black Sea keeps wheat market in its grip

It has been a case of laughing one moment and crying the next on the grain market for some time. The mood swings are mainly determined by developments on and around the Black Sea. Attacks on ports, ships and shipping routes are putting pressure on Russian and Ukrainian grain exports and are the reason for a higher risk premium in the wheat market. At the same time, it is becoming clear how fragile that premium is: as soon as rumors surface about agreements on safe shipping, prices fall again. For corn and soy, the focus is mainly on the American weather and a new USDA report. On Tuesday there were rumors that an agreement is in the making that would put an end to attacks on ships in the Black Sea. That signal was picked up by the trade and caused wheat prices on the futures markets to fall. The December contract on Matif in Paris fell by €2.75 on Tuesday to €230 per tonne. The September contract took an even bigger hit: down €4.50 to €217.75 per tonne. In that respect, the first expiring contract has had the hardest time over the past week. In one week, €7 has come off the price. For the later contracts, prices have remained virtually unchanged. Harvest 2027 has even risen somewhat in price, to €226.50 per tonne in September 2027. In Chicago, losses on Tuesday were in double digits. September fell by 10¼ cent to $6.30¼ per bushel. December lost 11 cent to $6.48¼ per bushel. This brings the price level to the equivalent of €201 per tonne of wheat for September and €206 for December. That was Tuesday. This morning the tables were turned again. Wednesday morning trading was once again gripped by the problems in the Black Sea region. Fearing export problems from this area, prices rose again this morning. Around midday Paris was suddenly €4.25 to €4.75 per tonne higher. September rose to €217.50 and December to €232.25 per tonne. Just at a time when Russia and Ukraine normally export large quantities of wheat, uncertainty about ports and shipping is creating extra tension in the market. Physical export figures also point to lower exports. SovEcon expects Russia to export only 3.0 to 3.4 million tonnes of wheat in August. Last year that was 4.5 million tonnes and the historical average is around 5 million tonnes. That would bring Russian exports back to the lowest August level in about ten years. Expectations for the full season have also been revised slightly downward. IKAR lowered its forecast for Russian wheat exports in 2026/27 from 45 to 44.5 million tonnes. At the same time, the production estimate was reduced from 90.5 to 90 million tonnes due to a smaller spring wheat area. In Ukraine, the logistical situation is even more clearly visible. In the first ten days of August, about 122,000 tonnes of wheat were exported. According to the Ukrainian agricultural council, exports of wheat and barley together are therefore only 6% of the level of a year earlier. Russian attacks have largely brought Black Sea ports to a standstill, according to the organization. Corn driven by the weather For corn, the focus is more clearly on the weather. The outlook for the American Corn Belt has improved. After a hot and dry July, milder temperatures and heavy rainfall in various places are expected. This improves yield prospects and put slight pressure on Chicago quotes on Tuesday. The December contract closed 1.25 cent lower at $4.60¾ per bushel. In the run-up to the USDA report, the market nevertheless expects the US yield estimate to be slightly lowered. The average expectation among analysts surveyed by Reuters is 182.4 bushels per acre, compared with 183.0 bushels in the previous USDA forecast. The European corn market is meanwhile seeing more fundamental support. Harvest expectations in Western Europe are weak and uncertainty over Ukrainian exports is also helping to keep prices supported. Since the beginning of July, the EU has imported 1.576 million tonnes of corn, 25% more than a year earlier. Ukraine remains the largest supplier with 681,000 tonnes, while the United States has increased its shipments to the EU from 146,000 to 483,000 tonnes. That leaves a mixed picture for corn: better American weather conditions are limiting upside in Chicago, but on the European side a weak local harvest and uncertainty surrounding Ukraine are providing a firmer floor. Soy gets ideal growing weather Soybeans are mainly under pressure from favorable weather forecasts. In the American Midwest, mild temperatures and regular rainfall are expected in the coming week. This comes at an important time, as many soybean plants are in the pod formation stage. Conditions are described as virtually ideal. The November contract lost 10.75 cent on Tuesday and closed at $11.68¾ per bushel. On the other hand, the market expects the USDA to slightly lower US ending stocks for both 2025/26 and 2026/27. Export demand also remains present. The USDA reported a sale of 136,000 tonnes of US soybeans to China for delivery in 2026/27. Brazil continues to be a strong competitor on the world market. ANEC raised its expectation for Brazilian soybean exports in August from 9.74 to 10.88 million tonnes. That is 34% more than in August last year.