Drought in the US gives wings to the grain market – Analysis of Grains & Raw Materials

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Analysis Grains & Raw Material

Today 12:35 pm – Jurphaas Lugtenburg

While wheat on the Matif just keeps rippling, the price on the Chicago stock exchange keeps steaming along. Yesterday the psychological barrier of $6 per bushel was broken. That last happened more than two months ago. The weather is and remains the main force behind the rally according to analysts. It was reported from Ukraine that the Minister of Agriculture is in trouble due to alleged involvement in corruption.

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The May wheat contract on the Matif closed yesterday €0.25 higher at €208.75 per tonne. On the CBoT, wheat maintained its upward trend of recent days, closing 1.3% higher at $6.02¼ per bushel. Corn showed a more modest gain of 0.7% to $4.41 per bushel. Soy took a step back to close 0.3% lower at $11.62¾ per bushel.

Ukrainian Minister of Agriculture Mykola Solsky was arrested today on suspicion of corruption. Solsky is accused of being involved in the illegal sale of Ukrainian state land, which took place from 2017 to 2021 and amounted to approximately $7 million. The land is said to belong to two state-owned companies and was transferred to war veterans on the condition that they lease it to private companies. Solsky denies the accusations against him. Solsky became Minister of Agriculture in March 2022. So there is no corruption during his ministership.

Solsky immediately submitted his resignation on Thursday after the allegations became known. Officially, he will remain minister until parliament has ruled on that request. Solsky is the first minister from Zelensky’s government to be prosecuted for corruption. Zelensky tries to implement a zero-tolerance policy on corruption and replaced his defense minister last year after allegations of corruption. Solsky is one of the driving forces behind keeping export routes open for Ukrainian grain.

Drought
A little further east in Russia, concerns about drought are increasing. The London stock exchange LSEG warns of drought in the southern wheat growing region of Russia. Rain is forecast in Russia, but will move north of the Volga region.

In the US, the weather also remains the talk of the day in the grain trade. Rain has fallen in the cornbelt in recent days. That is not enough to solve the drought problems, but it is enough to replenish the moisture in the top layer and help the early sown maize get started. More worrying, according to several analysts, is the lack of precipitation in Kansas and Oklahoma. Showers are forecast for early next week in the central and western cornbelt and eastern wheatbelt. But whether this makes grain growers happy is another matter. The American weather service speaks of the equivalent of 50 to 75 millimeters of water in a short time and warns of flooding and local flooding.