Market Overview
Worldwide wheat prices have witnessed a notable downturn over the past week, with quotations on major exchanges dropping by 3-6.6%. This decline is attributed to substantial stocks, sluggish export rates from key players like the USA and the EU, and forecasts of increased exports of competitively priced wheat from Ukraine and the Russian Federation.
Factors Driving the Decline
The pressure on wheat prices stems from improved conditions for winter crops and persistently low export rates from the US. Traders have been actively offloading wheat futures ahead of the long weekend in the US, coinciding with the observance of President’s Day on Monday.
US Export Scenario
According to the latest data from the USDA, wheat exports from the United States in the fiscal year 2023/24 have fallen by 11% compared to the previous year’s pace. However, export sales volume has seen a slight increase, reaching 17.6 million tons compared to 16.5 million tons during the same period last year.
Market Performance
March wheat futures experienced declines across major exchanges:
- Soft winter SRW wheat in Chicago fell by 1.1% to $205.9/t (-6.6% for the week).
- Hard winter HRW wheat in Kansas City dropped by 1.5% to $208.4/t (-6%).
- Hard spring HRS-wheat in Minneapolis decreased by 0.5% to $240.6/t (-4.6%).
Contrastingly, wheat futures on the Paris Euronext saw a slight increase, rising by 1.3% to €203.25/t or $213.7/t (-3%).
EU Market Dynamics
In the EU, soft wheat exports have declined by 8% compared to the same period last year, with notable reductions in exports from countries like France, Romania, and Poland. However, wheat imports have seen a modest increase, with Ukraine emerging as a significant supplier, accounting for 68% of imports.
Price Support and Crop Conditions
European wheat prices are partly upheld by concerns over crop conditions in France. Reports from FranceAgriMer indicate a deterioration in wheat crops, with only 68% rated as good or excellent, a stark decline from 93% last year. Additionally, estimates suggest a decrease in the sowing area of soft wheat by over 7%, marking the second-lowest figure in the last 30 years.
Conclusion
The current market landscape reflects a challenging environment for wheat, marked by abundant supplies, sluggish demand, and concerns over crop conditions. Stay informed as market dynamics continue to evolve in response to global factors impacting the wheat trade.
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