At Euronext, “many products are back to pre-war levels”, Gautier le Molgat of Agritel underlines, adding that the conflict will not dictate “the direction (of prices) as in the past”.
The downward movement that began in November continues in the grain market, favored by a glut of Russian wheat and renewed rains in the US.
On Monday, the benchmark soft red winter wheat (SRW) grade contract fell to a 16-month low of $7.125 a bushel, or $261 a ton, in Chicago.
Despite a slight rebound in the European market on Tuesday, the price decline remains a long-term trend, underlined Arlan Suderman of brokerage StoneX.
“The entire bounty of war has been wiped out,” he added, though the deployment of German Panther tanks to Ukraine, confirmed Wednesday, renewed growing concerns.
At Euronext, “many products are back to pre-war levels”, Gautier le Molgat of Agritel underlines, adding that the conflict will not dictate “the direction (of prices) as in the past”.
Wheat for delivery in March was trading at 283 euros a tonne and sorghum at 274.50 euros a tonne at 2:30pm GMT on Wednesday.
“The market has calmed down a bit with long-term uncertainty related to Ukrainian wheat production or the weather,” says Damian Vercambre, broker at Inter-Courtage.
Russia is selling its massive wheat crop, despite Russian President Vladimir Putin saying last week that “we cannot allow everything to be taken abroad.”
According to its agriculture minister, Agritel says 55 to 60 million tonnes of grain should be exported for the campaign.
“Russia sets the world’s wheat price,” says Arlan Suderman.
Rapseed wins
On the other hand, oilseeds and especially rapeseed “took a hit in Europe this week,” explaining that the German government plans to phase out biofuel production based on agricultural raw materials by 2030.
According to Agritel, “promoting the use of biofuels based on agricultural industry and recycled cooking oil waste” means reserving agricultural land for food production.
The proposal has accelerated the fall in rapeseed on the European market, which showed on Wednesday at 522 euros a tonne for delivery in February.
Palm oil and canola (Canadian GMO rapeseed) are also losing ground, with the latter falling to a four-month low as larger areas are planted in Canada for the 2023/24 campaign.
La Niña is starting to move away
In Argentina, which has been suffering from a prolonged drought, the return of favorable rains for soybeans has given some hope in recent days.
The lack of water, which affects more than half of Argentina’s territory, is linked to the persistence of the climatic phenomenon “La Niña”, which lasted for three winters and deprived it of sufficient rainfall.
According to the World Meteorological Organization (WMO), this will end in March, before continuing with the neutral period, which Damien Vercambre estimates is “a change in the weather pattern that could redistribute the cards”.
“While it’s too late for (South American) wheat, we believe it will be good for corn, soybeans, American winter wheat,” he adds.
This week’s forecast for rain and snow in several key states, such as Kansas, Oklahoma and Nebraska, has brought some relief. However, due to the drought and Winter Storm Elliott, Arlan Suderman believes “this comes at a time when the damage has already been done.”
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