Panic is a big word but wheat took another step up in the last trading session. Both on the Paris and Chicago stock exchanges, wheat closed at the highest level in over three months. Russia is the driving force behind the rally. The price fighter in the wheat market is reportedly considering export-restrictive measures.
The December contract for wheat on the Matif closed yesterday €6.25 higher at €233.75 per ton. On the CBoT, wheat closed 2.7% higher at $6.15¼ per bushel. Corn caught some tailwind from the wheat rally and rose by 0.8% to $4.32½ per bushel. Soybeans, on the other hand, lost some ground in the last trading session, closing 0.1% lower at $10.56 per bushel.
The Black Sea region is grabbing attention in the grains market. The dry conditions in eastern Ukraine and western Russia are well known. Yesterday, this was further emphasized by the Russian meteorological service. Due to a lack of rain, the growth conditions in various wheat areas are significantly worse than usual according to the Russian weather service.
Exporters call for export restrictions
According to the Russian Union of Grain Exporters, exports in the first quarter of the 2024/25 season are going very smoothly. Perhaps too smoothly for the association's liking. An estimated 17 million tons of grain have been exported in the first three months, the vast majority of which is wheat. For comparison: Russia exported 55.4 million tons of wheat in the entire 2023/24 season. SovEcon estimates that Russia has a total of 47.6 million tons of wheat available for export this season, while the USDA estimates 48 million tons. Considering the pace at which grain exporters are concerned about depleting their stocks is not unfounded.
It is somewhat remarkable that grain exporters are looking to the government to regulate wheat exports. The market effect is predictable. Possible export restrictions on relatively cheap Russian wheat have an upward pressure on prices. One could also question whether Russian exporters could have aligned their prices more closely with their European counterparts. It is clear that the Kremlin has a significant influence on grain exports. There are conflicting interests. On one hand, the Kremlin wants exporters to bring in orders and money. On the other hand, they also have an interest in maximizing prices on the world market.
Egypt on the hunt for wheat
The other big news in the wheat market indirectly involves Russia as well. According to various sources, the Egyptian state buyer Gasc has reached an agreement to import 500,000 tons of wheat per month from November to April. The grain from the Black Sea region is likely to come from Russia. Egypt is expected to import approximately 3 million tons of wheat from Russia over the next six months.
In August, Egypt attempted to secure 3.8 million tons of wheat at a competitive price in a tender, which failed. Only a total of around 260,000 tons were bid for in that tender. Now, Gasc seems to have succeeded in securing a large volume, albeit over a longer period.