Russia has been cautious this season in lowering the yield forecast for grains in the country. There is now some movement. An emergency meeting with grain exporters on possible export restrictions is scheduled. You don't do that when inventory positions are very ample. Soybeans are climbing despite favorable weather forecasts for South America. Trade is also taking some position in anticipation of the Friday Wasde report.
The December contract for wheat on the Matif closed €1 lower at €228.75 per ton yesterday. Wheat on the CBoT edged up and closed 0.7% higher at $5.99 per bushel. Corn mainly moved sideways and ended a quarter cent higher at $4.21 per bushel. Soybeans also closed in the green, up 0.4% at $10.20¼ per bushel.
Once again, Russia is attracting the attention of the wheat trade. The Russian ministry has called an emergency meeting with grain exporters. The meeting will discuss possible export restrictions. If there are restrictions on wheat exports, it will have a significant impact on the world market according to analysts. Russia is currently the price fighter in tenders, mainly from North Africa and the Middle East. This is why Russian exports are going smoothly.
Time is running out
After two years of very good harvests, this season's yield is estimated to be lower. Additionally, the southern part of Russia is very dry. This is causing problems with sowing winter wheat for the upcoming harvest. About 13 million of the planned 20 million hectares of winter grain have been sown. However, time is running out for Russian farmers. If sowing is delayed much longer, the wheat will enter the winter underdeveloped, increasing the risk of winterkill.
Russia has been very cautious so far in revising yield forecasts downward. It is not surprising that the Kremlin is getting a bit nervous now. While it is not explicitly stated, the discussions about export restrictions are seen as a sign by various experts.
Favorable weather for South America
Soybeans are a South American affair. After stable to slightly declining prices over the past week and a half, there was a cautious rise yesterday. The chance of rain in the dry areas of Argentina and Brazil is increasing according to weather reports. Market players now seem to be waiting for that rain to fall. Waiting for rain before sowing, as many Brazilian farmers have done, does not necessarily negatively affect soybean yields. The problems arise with the following corn crop. It will have to be sown later due to a delayed soybean harvest. This results in fewer growing days and potentially lower corn yields.
In the US, trade is also taking some position ahead of the USDA's Wasde report coming out tomorrow evening Dutch time. For corn, experts expect a slight downward revision for both harvest, consumption, and ending stocks. A slightly higher corn consumption in the US for ethanol production according to the new USDA figures did not really move the market. The ethanol inventory is lower than analysts expected, at 22.15 million barrels, the smallest in ten months. The market was anticipating a stock of 23.29 million barrels. This smaller inventory is providing some support for corn in the US.