Grain prices have continued to fall in Europe. The reason is the pressure from the current harvest. However, the focus this week is on another topic: a possible bursting of the grain deal and its consequences for the markets. Therefore, there could be further sharp price jumps.

In France and Germany, rainfall in recent days has repeatedly interrupted or slowed the harvest of barley and wheat (France). Similar to Germany, yields are highly uneven in France, depending on soil type and rainfall, Agritel analysts report.

At the end of last week, the winter barley harvest began in many regions in Germany, and is progressing rapidly in France. Now farmers are waiting for wheat and rapeseed to reach full maturity, then the combines will start here as well. Therefore, farmers are currently mainly concerned with grain harvesting and are less busy with marketing.

However, the focus of attention this week is the Black Sea grain agreement, which expires on Monday, July 17. The geopolitical turmoil surrounding the Ukrainian export corridor will therefore be intense in the coming days, say Agritel analysts, and will determine market activity.

No reason to extend the deal?

 FAO economist Tothova noted that according to the latest FAO Cereal Price Index, published monthly by the FAO, cereal prices are currently continuing to fall significantly. In Europe, wheat prices on MATIF have fallen below 230 euros per ton.

The risk of a short-term halt to the grain agreement is real, but a full cancellation is unlikely, state sources in Turkey told the TASS news agency on Monday. “We see statements from the Russian side that there is no reason to extend the deal. But there is agreement that these are temporary difficulties; there have already been crises regarding the deal. In the worst case, it can be suspended for a short time.”

Agreements cannot be implemented unilaterally without Russia, the statement continues. Ukrainian grain exports provided under the Black Sea Grain Initiative (BSGI) contribute to the stability of world markets, so an extension of the agreement is highly desirable, Monika Tothova, economist at the Food and Agriculture Organization of the United Nations (FAO), said Monday.

Tothova pointed out that price volatility due to market reactions to political events and statements has a negative impact on farms and importing countries. Tothova further noted that according to the latest FAO Grain Price Index, which is published monthly by the FAO, grain prices currently continue to decline significantly.

Russia: Demands not met

The situation around the grain deal has indeed not changed, Kremlin spokesman Dmitry Peskov told international media when commenting on Turkey’s proposal to extend the agreement, which expires July 17, for two years.”Nothing has changed in the deal so far and we cannot tell you anything new,” he said. “On March 18, 2023, Russia announced a 60-day extension of the agreement and warned that this was enough time to evaluate the implementation of the memorandum signed with the United Nations. On May 18, the grain agreement was extended for another two months until July 17. Russian Foreign Minister Sergei Lavrov said earlier that an extension of the grain agreement would be out of the question unless the Russian package of Istanbul agreements was enforced, adding that the agreement was still being implemented only with respect to the supply of Ukrainian grain.”

Source: Agrarheute.com