Talked to the CEO of Germany‘s largest private grain trader. He advises farmers to sell 80-90% of old crop wheat and 50% of new crop. Due to his past as the global head of research of infamous Alfred C. Toepfer (nowadays ADM‘s analysis unit in Hamburg), he still is very much into the details of global grain markets. His core argument: 🔸Wheat is 15% too expensive when purely looking at his fundamental model. The only reason prices are so high is because of the current Black Sea logistics issues 🔸Once there is a new grain deal, prices will correct sharply 🔸He is convinced there will be a grain deal. Re-routing grain via train from Ukraine to Poland or Rostov to St. Petersburg is costing enormous amounts. 🔸On-farm prices of below $3/bu (100/t) are putting immense pressure on Ukraine‘s and Russia‘s governments. Farmers don’t have financial buffers. Especially the large agro-holdings are on the brink right now because most of them are highly leveraged. Now interest rates went up while grain prices crashed. 🔸 Do both governments really wanna sacrifice their farmers? He doesn’t think so 🔸El Nino is still far away. Also, for grains it’s usually good due to better moisture in Argentina und Southern US (HRW). Only Australia would really suffer, but there it looks really good so far 🔸Only oilseeds suffer in an El Nino due to dryness for palm oil areas in Asia 🔸Wheat area goes down in Ukraine and Russia. But especially Ukraine has a history of planting much more corn and sunflowers when wheat planting struggles or they have winter kill. Corn has double the yield of wheat.