Rising Pressure on Global Wheat Prices
World wheat prices are under pressure due to a significant increase in the wheat harvest forecast for the Russian Federation. Last year, Russia accounted for 28% of global wheat exports, making its harvest projections crucial to market dynamics.
Market Reaction to Forecast Adjustments
Global wheat quotations had risen by 30% based on earlier forecasts predicting a reduction in the Russian wheat harvest in April-May. However, a new upward adjustment in these estimates has led to a decrease in prices.
Russian Wheat Exports and Prices
According to Rusagrotrans analysts, the Russian Federation exported 55.4 million tons of wheat in the 2023/24 marketing year, increasing its share in global exports to 28% from 25% in 2022/23.
- Export prices for July delivery of Russian 12.5% protein wheat fell by $10/t for the week to $222/t FOB.
- In comparison, French wheat was offered at $238/t,
- German at $244/t,
- US wheat at $222/t FOB.
SovEkon’s Increased Production Forecast
Improved weather conditions in spring wheat-growing regions and initial harvest data prompted the SovEkon agency to raise its forecast for Russian wheat production in the 2024/25 marketing year by 3.4 million tons to 84.1 million tons. Meanwhile, USDA experts lowered their forecast for Russian wheat production from 88 million tons to 83 million tons in June.
Regional Harvest Data
Operational data shows that farmers harvested early cereals on 22% of the area in the Rostov region, achieving an average yield of 3.6 t/ha. In the Stavropol Territory, they completed harvesting on 53% of the area, with an average yield of 3.56 t/ha, slightly lower than last year. Farmers in the Krasnodar region harvested winter wheat on 50% of the area, maintaining an average yield of 6.5 t/ha, which matches last year’s figure. Nearly 83% of the examined wheat qualifies as food quality.
Decline in Wheat Futures
July wheat futures experienced a decline yesterday:
- Soft winter SRW wheat in Chicago: down 1.3% to $203.7/t
- Hard winter HRW wheat in Kansas City: down 2% to $213.7/t
- Hard spring HRS wheat in Minneapolis: down 1.1% to $228.18/t
- September wheat futures on the Paris Euronext: down 1.7% to €223.25/t ($240.8/t)
The revised forecast for the Russian wheat harvest underscores the significant impact of weather and production estimates on global wheat prices. Stakeholders should closely monitor these developments to navigate market fluctuations and make informed decisions.