Market Morsel: Russian wheat hits new high
Russian wheat prices continue to rise fast. Last week, 12.5% wheat in deep-sea ports climbed $7 to $255/mt, a new season-high, following global benchmarks. Wheat in Chicago and Paris climbed 0.4-1.2%. The corn market in Chicago rose more than 4% week on week.
China’s imports was one of the key stories supporting the increase in grain prices all over the world. According to trading sources, the country has already booked 17 MMT of corn in the current season, as per Reuters. USDA estimates 20/21 imports only at 7 MMT. The annual quota is set only at 7.2 MMT for a calendar year and so far, Chine’s authorities haven’t officially confirmed that it would be revised. China has also become a key buyer of French wheat recently, supporting MATIF.
The lack of transparency around actual Chinese corn imports and quotas keeps feeding bulls – there are some trade estimates that the corn quota could be upped by 20 MMT. USDA FAS’ grain update mentioned the same possibility earlier in October.
China is not the only source of bullish news for the corn market. It looks like USDA substantially overestimates corn crop in the Black Sea. SovEcon has recently lowered Ukraine’s corn crop estimate to 29.4 MMT (35.9 MMT in 2019; 36.5 MMT – as per WASDE). Russia’s crop estimates at 13.7 MMT (14.3 MMT; 15 MMT). So, in total USDA could be overestimating local crop by as much as 8.4 MMT (331 mln bu).
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