Analysis Grains

Ukraine seized a ship with 'looted' grain

July 11, 2024 - Jurphaas Lugtenburg

The unrest in the Black Sea region is increasing. Russia fired rockets at the port of Odessa and Ukraine has seized a ship loaded with grain from Sebastopol. Copa-Cogeca expects the smallest wheat harvest since 2018 for this season. However, these reports do not seem to have much impact on the market.

The September wheat contract on the Matif closed €5.25 lower at €220.75 per ton. Wheat on the CBoT closed 1.9% lower at $5.43½ per bushel. Corn showed a modest increase of 0.7% in the last trading session, reaching $5.43½ per bushel. Soybeans lost 1.7% and closed at $11.41¼ per bushel.

Overall, a rather strange situation is emerging in the wheat market. Expectations for the upcoming harvest in Europe are not great and the weather is not cooperating. However, the market is barely reacting to these factors. Yesterday, the European farmers' association Copa-Cogeca released the yield forecast for the European wheat harvest. The total wheat harvest is estimated at 117.5 million tons compared to 125.5 million tons last season. If this prediction holds true, it would be the smallest wheat harvest since 2018.

Quality Issues
In Western Europe, the weather remains wet. In France, harvesting is progressing slowly between showers. This is aside from the impact of rain on the quality of wheat. In Russia, the weather is warm and dry, ideal for harvesting. However, the initial harvest results in Russia are not as expected. The protein content is lower than anticipated. Some analysts suggest that this could lead to less Russian wheat available for export meeting the 12.5% protein standard.

The conflict in Ukraine is escalating as well. There are reports that Russia conducted a missile attack on the port of Odessa, resulting in the deaths of a truck driver and a security guard. According to Reuters, Ukraine has seized a cargo ship sailing in the Odessa region. The captain of the ship has been detained. The ship, flying the flag of a Central African country, is reported to have 'plundered' grain loaded in the port of Sebastopol, as stated by the Ukrainian secret service SBU.

According to the SBU, the ship's crew assisted Russia in exporting grain from the occupied southern part of Ukraine to the Middle East. "The investigation is ongoing to establish all the circumstances of the crime and identify other individuals involved in the illegal activities," Reuters quoted the SBU as saying.

Hot Weather
For corn and soybeans, all eyes are on the US. Temperatures in the cornbelt are expected to rise to over 30 degrees in the coming days. This is not ideal for crops in bloom or tassel, but there is sufficient moisture in the soil due to the rain brought by the remnants of Hurricane Beryl yesterday. Local sources suggest that the plants can withstand this, but concerns will arise if it remains dry in the second half of July.

This Friday, the USDA will release the July edition of the Wasde report. Analysts do not anticipate major changes in the report. However, a slight bearish tone is expected, mainly due to the relatively good wheat harvest in the US and the favorable condition of corn and soybeans in the country.

Jurphaas Lugtenburg

Jurphaas Lugtenburg is a market specialist in onions, carrots, and commodities such as wheat, corn, and soybeans at DCA Market Intelligence. He combines his degree in business administration with a passion for farming.

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