Russian peace signal puts pressure on wheat market

The grain market took a big hit after remarks by Russian President Putin about possible peace with Ukraine. Wheat in particular gave up a lot. Some analysts wonder whether the reaction was a bit overdone. At the same time, drought in Europe and the US remains an important factor and Chinese demand is keeping the soy market afloat. The September contract for wheat on the Matif closed yesterday €11.25 lower at €233 per tonne. The December contract lost a little less and closed €8 lower at €248.75 per tonne. On the CBoT, wheat also had to give ground with a loss of 18¾ cent to $7.36 per bushel. Corn was also in the red, but here the loss remained limited to $5.15¼ per bushel. Soybeans, in contrast to the grains, showed a gain of 4½ cent to $13.06¼ per bushel. At a rather unexpected moment, Russian President Putin hinted yesterday at peace between Russia and Ukraine. Putin made the statements at an economic conference in the Russian Far East. According to Putin, several countries including the US and China are ready to support a peace deal. Ultimately, however, the problem must be resolved by the countries involved in the conflict, Russia and Ukraine, Putin said. We are grateful to everyone who is trying to contribute to a settlement. Is there a chance? In my opinion, yes. The Ukrainian foreign minister spoke yesterday during a press moment in Kiev about 'a new dynamic in the peace efforts'. Break in trend Putin's statements are being described as remarkable by various analysts. Earlier this week, Putin still seemed to feel nothing for a Turkish proposal to get shipping on the Black Sea moving again and now even a peace agreement is being talked about by the Russian leader. Putin's statements did not go unnoticed by the grain market. The prospect that grain from Russia and Ukraine could soon return to the market put prices under significant pressure. Some analysts speak of an overreaction in the market. The damage that has been done to the infrastructure is not repaired right away even if a peace agreement can be reached quickly. That last part is still doubtful, by the way. In recent hours there has again been plenty of action with attacks back and forth. Last night, for example, Ukraine carried out a drone attack on an oil depot near the Russian city of Sochi. Fifth heat wave France is preparing for a new heat wave, Météo-France reports. It is the fifth this year and France had the warmest summer since measurements began. Over the weekend, temperatures of up to 40 degrees Celsius are forecast for southwestern France. For corn, the extreme heat this season has been anything but good. FranceAgriMer writes that 27% of the grain corn in France is in good or excellent condition, compared with 28% last week. It is the worst condition for corn since 2011, when the tracking of this data began. According to the official forecast of the French Ministry of Agriculture, the corn harvest this season will be 35% lower than last season. However, various analysts are taking into account the smallest harvest since 1976. Demand from China American soybean growers are benefiting from strong demand for soybeans from China. The USDA announced several flash sales of soybeans to China this week. Yesterday there was another one of 192,000 tonnes. All in all, China has bought 11.5 to 12 million tonnes of soybeans in the US according to some analysts. That is just under half of the 25 million tonnes that China has promised to buy. In three weeks, Chinese President Xi will visit Washington and some sources expect that China will secure even more soybeans ahead of that visit. In the American wheat belt, concerns about drought are meanwhile increasing further, according to the new drought monitor. The harvest of spring wheat is progressing quite well, but 82% of the growing area is dealing with drought. The new season for winter wheat will start dry. 59% of the acreage is affected by drought. That was 56% last week and 25% this week last year.