The bullish madness of agricultural raw materials, the prices of which broke records with the war in Ukraine, seems to be weakening: the prices of wheat, soybeans and rapeseed have marked a drop in recent days, in particular because Russian wheat exports appear to be overcrowded.
The US Department of Agriculture (USDA) has further reassessed Russian production upwards, already described as exceptional, in its monthly report published on Friday. It should climb to 88 million tonnes of wheat for this season, with 42 million tonnes destined for export. “Net importer of wheat in 2000, Russia is now the first exporting countrycommented Arthur Portier, consultant at Agritel. Provided, the cabinet recalls, that Russia has the logistical capacities to export.
3.6 million tonnes of wheat exported since the beginning of July
Russian floating taxes, which apply to products and change every week, also tend to put off importers. European exports manage to meet the strong global appetite and maintain a steady pace, with 3.6 million tonnes exported since the beginning of July, France in the lead with 1.5 million tonnes exported. On Euronext, shortly before 3:00 p.m. GMT, soft wheat was selling at 323.25 euros per tonne for delivery in September, against 340.50 at the close last Wednesday.
Despite the symbolic importance of the newly opened maritime corridors in the Black Sea, opened thanks to the agreement signed between Russia and Ukraine on July 22, the resumption of traffic in the Black Sea “has almost no impact on the market“, Estimates Arlan Suderman, of the StoneX brokerage platform, which points to “insufficient volumes“. According to the UN, between August 1 and 15, 21 bulk carriers left the ports of Odessa, Chornomorsk and Pivdenny, with 563,317 tons of agricultural raw materials on board, the majority of which was corn. The Ukrainian Ministry of Agriculture also reports that 2.65 million tonnes have been exported since June 1 – all means of transport combined – or 46% less than last year, according to the UkrAgroConsult site.
Decline in soybeans and rapeseed
The USDA was more optimistic than expected on soybeans, raising forecast production by 1.4 million tonnes thanks to the United States and China. Added to milder weather forecasts in the Midwest, prices for all commodities dropped at the end of the week in Chicago, notes Michael Zuzolo, president of Global Commodity Analytics and Consulting, after three weeks of bullish momentum. On the Chicago Stock Exchange on Wednesday, shortly before opening, soybeans were trading at $14.6825 for September delivery. SRW wheat was trading at $7.7350 a bushel and corn at $6.1275.
In the wake of soy, oil and palm, rapeseed also marked a sharp decline on Euronext at the start of the week. Wednesday around 3:00 p.m. GMT, it sold at 619.50 euros per tonne for the November deadline, against 659 euros at the close a week ago. Even if a feeling of normalization seems to be coming back timidly, “macro-economic or non-agricultural market elements“, like the slowdown in China and the global economy, put the raw materials under pressure, underlines Arlan Suderman. The demand for soybeans, for example, could decline because of China, the world’s largest importer and the United States’ largest customer.
Corn growing conditions continue to deteriorate
Growing conditions continue to deteriorate in Europe and the United States, due to the lack of water and high temperatures, with no possibility of improving at the end of the season despite the return of the rains. The USDA lowered the US production estimate by almost 4 million tons, due to the drought in the “Corn Beltin particular, and 8 million that of the European Union. Despite these forecasts, the price fell on Wednesday around 3:00 p.m. GMT to 314.25 euros per tonne against 330.50 euros at the close last Wednesday. These declines in production promise to inflate European demand for maize, mainly for animal feed. Last week, European imports have already reached 3.6 million tonnes since the beginning of July, double last year over this period.