Analysis Grains
Russia receives support for its own grain exchange
On the last day of the Brics summit in Kazan, the members rallied behind Russia's plan to establish a grain exchange within the Brics framework. Whether the initiative is as noble as Putin presents it is doubted by various experts. In Europe, the weather seems to be turning more favorable for sowing winter wheat. In South America, the weather forecasts are reasonably favorable for soybean and maize growers as well.
The December contract for wheat on the Matif closed marginally higher in the last trading session at €223.75 per ton, up by €0.25. Wheat on the CBoT showed a slightly stronger performance, rising by 0.4% to $5.78½ per bushel. Maize closed 0.6% higher at $4.19 per bushel. Soybean also closed in the green, up by 0.6% to $9.97½ per bushel.
Russia once again drew attention to the grain market yesterday. The Kremlin's plan to start a grain exchange within the Brics framework has received support. The Brics countries, including Brazil, Russia, India, China, and South Africa, met in Kazan during the past few days. "We welcome Russia's initiative to establish a grain (commodities) trading platform within Brics (the Brics Grain Exchange) and to develop it further, including expanding it to other agricultural sectors," the countries wrote in the summit's closing statement.
The new exchange is intended to become a tool for achieving fair prices. It should become a predictable indicator and thus a tool in global food security. Several analysts are critical of the Russian initiative. They argue that Putin aims to gain more control over the grain market by introducing its own exchange.
Weather Provides Some Relief
The weather forecasts are more favorable for farmers in Europe and South America. In our part of the world, a drier period seems to be finally arriving. While rain has not completely disappeared from the forecasts, there seem to be opportunities to make significant progress in sowing winter wheat. In South America, rain and showers are still expected. The central part of Argentina received significant rain in recent days, which was much needed after a relatively long dry period. For Brazil, showers are alternating with sunshine. According to local sources, seeding machines can continue operating, and soybeans that have been sown are quickly growing due to the rainfall.
Despite these favorable weather forecasts, maize and soybeans remain strong on the Chicago market. Analysts attribute this to the strong demand for these products. The USDA reported an order for 100,000 tons of maize to an undisclosed destination. The US has already exported a total of 1.9 million tons of maize this month. Meanwhile, ethanol production in the US reached its highest point in two months. The ethanol inventory was lower than analysts expected. Traders are focusing more on demand than on potential production later in the season. This sentiment is further reinforced by speculators, who believe that prices are currently at a level that still has room to rise.
