Analysis Grains
Russian wheat on the rise due to limited supply
The cold in Russia and America creates a steady undertone in the wheat market. What also helps is that the supply of wheat from Russia is decreasing. As a result, prices for Russian wheat have started to rise. European exporters are not really able to fill the gap left by Russia. In fact, the export backlog compared to last season is increasing further.
The March contract for wheat on the Matif closed €0.25 higher at €229.75 per ton yesterday. On the CBoT, wheat closed 0.8% higher at $6.04¾ per bushel. Corn was a bit stronger in the last trading session, up 1.2% to $5.02 per bushel. Unlike grains, soybeans traded more sideways on the Chicago exchange, ending with a 0.2% increase to $10.38½ per bushel.
The cold weather in the US and Russia continues to set the tone in the grain market. Both in America and Russia, snow preceded the cold front, so widespread winterkill is not immediately a concern. Not everywhere has the same amount of snow, so experts expect some frost damage in certain areas. In the central southern part of Russia, temperatures are dropping to 19 degrees below zero according to the Russian meteorological service. Ikar is lowering the yield expectation for the upcoming Russian harvest by 1 million tons to 129 million tons. This reduction is a result of the cold and frost damage likely caused by the weather.
Weather Extremes
The entire growing season for Russian farmers has been marked by weather risks, partly due to climate change, according to Russian Minister of Agriculture Oksana Lut at the 'Global grain and pulses forum' in Dubai. For the current export season (2024/25), she maintains the export expectation at the earlier forecast of 55 to 57 million tons. For comparison: the season before, Russia exported 72 million tons of grain according to ministry data.
The decrease in wheat supply from Russia is also reflected in Russian prices. Ikar raised the price of Russian wheat by $2 compared to last week to $247 per ton FoB (delivered on the ship). "Prices have mainly risen due to a sharp drop in supply," writes Dmitry Rylko in an explanation of the price. SovEcon increased its price for Russian wheat by €1 to $242 to $246 per ton. According to SovEcon, Russian exporters need significantly higher prices to achieve an acceptable margin. Despite the Russian export quotas that came into effect on February 15 and bad weather in the Black Sea ports causing shipping problems, the wheat price in Russia is rising. Export margins remain thin, SovEcon notes.
Incomplete
The decrease in wheat from Russia is not reflected in European export figures. Until February 16, the EU exported 13.3 million tons, according to the European Commission's export data. Last week, not even 300,000 tons of wheat were exported. This time last year, the export tally was at 20.8 million tons. So, we are 36% behind last season. Part of this smaller export is due to disappointing yields last harvest in Europe and competition from the Black Sea region. A point of frustration is that the European Commission's data is incomplete. There have been issues with data from Bulgaria and Ireland since 2023, incomplete data from France since 2024, and now we have not had a complete overview from Italy for ten weeks.
The weather in South America is influencing the corn and soybean market. A drier period in the east of Brazil allows farmers to progress with soybean harvesting and corn planting. In Argentina, the weather is less favorable. The rain over the past weekend helped somewhat, but large parts of the pampas remain dry. Sources indicate that soil moisture levels are at their lowest in six years. Only rain is expected in the north of Argentina for the coming week. Significant changes in corn and soybean conditions are not anticipated.
