Black Sea exports keep uncertainty high in wheat market

The wheat market took a step higher in the past trading session. The availability of grain from the Black Sea region remains a difficult factor to assess. For Russian exports, comparisons are being made with 2010. The growing season has been very different this year, but the parallel is interesting. In the US, the results of the Crop Tour are known. Maize did less well there than many analysts expected. The September wheat contract on the Matif closed yesterday €4 higher at €227,50 per tonne. On the CBoT, wheat closed ¼ cent higher at $6.81¾ per bushel. Maize was stronger and gained 7¾ cent to $4.91½ per bushel. Soy, in contrast to the grains, took a step back on the CBoT and closed 9 cent lower at $12.16 per bushel. More than four hundred years ago the Dutch legal scholar Hugo de Groot, the one from the book chest, argued for free access to the sea and laid the foundation for the current international law of the sea. The idea of De Groot, free access to the sea, is now under considerable pressure in two regions. The Strait of Hormuz attracts the most attention in the general media. The problems with free passage to and from the Persian Gulf mainly affect the oil market. For the grain market, developments in and around the Black Sea are of greater importance. Ukraine and Russia, together accounting for about a quarter of the wheat traded on the world market, have been carrying out targeted attacks in recent weeks on each other’s grain export infrastructure and on ships loaded with grain. Ukrainian president Zelensky has put forward a proposal to the Kremlin for a ceasefire to keep ships loaded with agricultural products out of the fighting. Hard against hard Ukraine’s proposal has been rejected by Russia. Various sources quote Putin as having commented on the proposal on Russian state television. Somewhat remarkably, the Russian president also spoke there about the consequences of the Ukrainian drone attacks on Russia. In particular, the Ukrainian drone attacks on refineries deep inside Russia seem to be a major pain point for the Kremlin. We are always open to dialogue about peace, but only on the basis of the actual situation on the ground, Putin said on state television. It seems that their position is that they will only stop attacking our grain corridor if we stop attacking their energy sector, various sources quote Zelensky as saying. Because of the actions in the Black Sea, the export of grain from both Ukraine and Russia is being significantly hindered. APK Inform reports that Ukraine exported 188.200 tonnes of grain in the week ending 19 August. That is 11,5% less than the week before. Total grain trade on the world market could end up 8% lower because of the unrest in the Black Sea region. Russian grain exports could fall back to the level of 2010, according to various sources. Repeat of 2010? The comparison with 2010 is interesting. In that harvest year, yields disappointed. In large parts of Europe, we had a wet winter and an unsettled summer then, which caused wheat yields to disappoint. In Russia, that year was warm and dry, resulting in low grain yields. The shift from a market characterized by ample supply to a market with more tightness is something we see more often at the end of summer or in autumn. In 2010 the rise started relatively early, but in the more expensive wheat years 2007 and 2021 the market only really began to move once the harvest was truly behind us. In the US, threshing of spring wheat is progressing smoothly. 62% of the acreage has been harvested compared with 52% this week in the five-year average, according to the new Crop Progress report from the USDA. The condition of maize in the US deteriorated slightly this week. 57% of the acreage is rated good or excellent compared with 60% last week. Of the soybean acreage, 60% receives the good or excellent rating compared with 61% last week. Last week, the Pro Farmer Crop Tour in the US was also concluded and the results were announced. The average maize yield is estimated at 173,2 bushel per acre (about 11,7 tonnes per hectare). In its latest forecast, the USDA calculated a yield of 180,7 bushel per acre. Data The difference between the figures from the Crop Tour and those from the USDA is, according to the tour, due to the way the data is collected. The USDA surveys farmers who look at the plot, so they have a very good picture, but there are no objective data, Lane Akre, Pro Farmer market specialist, explains at AgWeb. When you go into the field and start counting the cobs and measuring the cobs and kernels, it turns out the harvest simply is not where it should be.