Russia in turmoil over frost damage in grains – Analysis of Grains & Raw Materials

Shutterstock

Analysis Grains & Raw Material

Today 12:25 pm – Jurphaas Lugtenburg

Late-season frost in southern Russia is ‘catastrophic for crops’ there. You cannot deny local leaders some sense of drama. There is little discussion about the fact that there is frost damage, but according to some analysts it is being reported very strongly. Egypt has made its mark on the wheat market and secured more than the market expected.

Do you have a tip, suggestion or comment regarding this article? Let us know

The May wheat contract on the Matif rose yesterday by €6.50 to €215.25 per tonne. The September contract amounted to €244.75 per tonne. On the CBoT, wheat was also on the rise, rising 0.6% to $6.19¾ per bushel. Corn took a step back on the Chicago exchange, closing 0.6% lower at $4.42¾ per bushel. In soy the decline was even stronger. The price fell 1.6% to $11.92¾ per bushel.

Frost has wreaked havoc in three southern provinces of Russia. In Lipetsk, Voronezh and Tambov, frost has caused serious damage, resulting in lower yields. The provinces have therefore declared a state of emergency for agriculture in the area. “The frost in May will have catastrophic consequences and the coming harvest will therefore be much smaller,” writes Igor Artamonov, governor of Lipetsk on Telegram. His counterpart from Tambov writes that crops in his province have frozen off and that winter grains have suffered serious damage. According to the Ministry of Agriculture of Voronezh, according to initial data from the province, 265,000 hectares have been frozen or seriously damaged. The Russian news agency Tass reports that the necessary plots need to be reseeded.

There is no doubt that there is frost damage in Russia. Some analysts believe that Russia is seizing the opportunity and amplifying the damage to further stimulate grain prices. The Kremlin is not unsuccessful in this regard if you look at the reaction on the market.

Tender
In addition to the news from Russia, Egypt also provided support on the wheat market. State buyer Gasc has secured more wheat in a tender than the market expected. In total, Egypt bought 420,000 tons of wheat in the latest tender. Of this, 360,000 tons come from Russia and 60,000 tons from Romania. All Russian tenders were at $255 per ton FOB (delivered to the ship) and a deferred payment period of 270 days. The Romanian party whose offer was accepted was at $259.50 per tonne FOB.

Drought in the US is easing
In the US, concerns about drought in the Corn Belt are subsiding somewhat. The rain of the past few days/week did not come at the best time for sowing corn and soy. On the other hand, growers are relieved that the moisture supply in the soil has been replenished. In the western wheatbelt the weather was less cooperative. Farmers in western Kansas and Oklahoma caught grain at the tail end of the rain.

Tonight Dutch time the USDA will release the May edition of the Wasde Report. For corn and soy, the trade expects lower world ending stocks for the 2023/24 season, according to the Wall Street Journal poll. No major changes are expected for the closing stock of wheat. The May edition is the first Wasde report with expected stock figures for the 2024/25 season. That’s where trading in expectations is happening bearish for corn and soy and bullish for wheat.