Grain prices continue to rebound in the market, which is now heavily influenced by the weather, particularly the drought in the United States, the world’s largest corn producer. The latest weekly report from the US Department of Agriculture (USDA) has revealed a further deterioration in the cultivation conditions for yellow grain, marking the worst conditions since 1992. This news has caused concern among operators and has led to tension on the Chicago Stock Exchange. European wheat prices have also been affected, with prices rising and the market becoming increasingly nervous.
The weather market, as it is called, generates movements in prices that are amplified by the financial sphere. However, experts suggest that it is necessary to wait until July, during pollination, to get a better estimate of crop yields. This type of price increase is often short-lived, as the market eventually shifts its focus to demand rather than weather-related concerns.
Despite the drought in the United States, recent rains in the southeastern region have provided some relief. More rain is expected in the coming days, which will help water the soybeans and corn in the Corn Belt.
In addition to the weather, European wheat prices are facing competition from Russian wheat. Russia is offering extremely competitive prices to offload its colossal stocks. Algeria, for example, has recently purchased around 630,000 tons of wheat, mainly of Russian origin, at unbeatable prices.
The situation is further complicated by the uncertainties surrounding the extension of the Ukrainian grain export agreement, which is set to expire on July 18. The strong price difference between Russian and European/American wheat poses a risk for European and American exporters. The weather-related fears have overshadowed the concerns about the extension of the Ukrainian agreement.
During a recent visit by an African mediation delegation to Russia, Moscow accused the West of blocking Russian grain and fertilizer exports with its sanctions. Many operators have given up on the continuation of the Ukrainian agreement, which has allowed more than 31 million tons of grain to be exported from Ukraine via the Black Sea. This has supported wheat prices without causing them to soar.
While the Ukrainian corridor remains an option for grain exports, it is more difficult and expensive compared to European ports. However, the Ukrainian harvest is expected to be reduced by at least 30% due to mined areas or areas under Russian control, which will limit the volume of grain available for storage.
China is currently the largest beneficiary of grain shipped through the Ukrainian corridor, followed by Spain and Turkey. China is continuing to load corn and is expected to reach 5.5 million tons of imports through this agreement.
Overall, the grain market continues to be influenced by weather conditions, with the drought in the United States and the uncertainties surrounding the Ukrainian grain export agreement being the main factors affecting prices. It remains to be seen how these factors will impact the market in the coming months.
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How is the competition from Russian wheat affecting European wheat prices
The grain market is experiencing a steady rebound, largely driven by weather conditions, particularly the drought in the United States. The US Department of Agriculture’s latest report suggests that the cultivation conditions for yellow grain are deteriorating, reaching their worst levels since 1992. This news has raised concerns among operators and has caused tension on the Chicago Stock Exchange. European wheat prices have also been influenced, as prices are rising and the market is becoming increasingly anxious.
The weather market, as it is known, triggers price movements that are further amplified by financial factors. However, experts advise caution and suggest waiting until July, during pollination, to have a better understanding of crop yields. Typically, such price increases are short-lived, as the market eventually shifts its focus to demand rather than weather-related concerns.
Although the United States is facing a drought, recent rains in the southeastern region have provided some relief. Further rainfall is expected in the next few days, which will aid in watering soybeans and corn in the Corn Belt.
In addition to weather conditions, European wheat prices are also being affected by competition from Russian wheat. Russia is offering highly competitive prices to sell its substantial wheat stocks.
This article highlights the cruel reality of drought and its significant impact on grain prices in the United States. It sheds light on the weather market’s effects, emphasizing the urgency for sustainable solutions to safeguard food security in the face of climate change.
The ongoing drought in the United States has sent grain prices soaring, creating a volatile weather market. Farmers are feeling the pressure as their crops suffer, potentially impacting food prices globally. Climate change poses significant challenges, urging us to address sustainability and implement effective measures to mitigate future droughts.