After falling last week to the lowest level since 2021, wheat prices on global exchanges began to recover amid increased speculative demand and purchases by importers. They are also supported by uncertainty about the harvest in the US and Australia, where production will be lower than last year, as well as the possible termination of the grain deal due to the Russian blocking of vessels to Ukrainian ports.
ABARES Agency forecasts that wheat production in Australia in 2023/24 MY will decrease by 34% to 26.2 mln tonnes compared to the previous season due to lower precipitation due to the El Niño phenomenon, although USDA estimates the harvest at 29 mln tonnes (39 mln tonnes in 2022/23 MY).
Russian inspectors continue to block the work of the grain corridor, so no ship inspections have been conducted since May 31. Ukraine unveiled a plan B to withdraw from the grain agreement with Russia and continue exports from Black Sea ports under state guarantees for shipowners.
According to the USDA’s Crop Progress, as of June 5, 93% of the US spring wheat area was planted, which corresponds to the 5-year average, and winter wheat was harvested on 4% of the area (5% last year and 4% on average). 64% of spring wheat is in good or excellent condition. The condition of winter wheat crops did not change during the week – slightly deteriorated in Indiana, Michigan, Ohio and Washington, but improved in Kansas, Colorado, Oklahoma, Texas and North Carolina. Forecasts of dry and hot weather for the next 2 weeks worsen the prospects for the spring wheat crop.
Yesterday, July futures rose in price:
- Soft winter SRW wheat in Chicago (+5.6% for the week) – by 0.8% to 229.3 $/t
- Hard winter HRW wheat in Kansas City (+4.7%) – by 1.2% to 302.1 $/t
- Hard spring HRS wheat in Minneapolis (+3.4%), – by 1.5% to 301.4 $/t
- September wheat futures on the Paris Euronext (+2.1%). – by 2.9% to 230.5 €/t or 247 $/t
- July futures for black sea wheat in Chicago remained at 252.75 $/t.
Export prices for Ukrainian wheat with 11.5-12.5% protein for delivery to the Danube ports fell to $170/t FOB in June, and the volume of offers remains low. During June 1-5, Ukraine exported only 52 thousand tons of wheat, and the total for the season is 15.56 million tons (18.6 million tons last year).
On June 2, the Saudi Food Security Authority (GFSA) held an international tender for the purchase of 480 thsd tonnes of durum wheat for delivery in September-October, where it purchased 624 thsd tonnes of wheat with 12.5% protein at the average price of $261.76/t C&F. The low purchase price may lead to lower prices at today’s tender in Egypt.
European wheat is rising in prices amid an extension of the ban on wheat exports from Ukraine to 5 neighboring EU countries until September 15 and dry conditions in some European countries.
According to FranceAgriMer, in France, as of May 29, 91% of soft wheat crops were in good or excellent condition (93% a week ago, 67% last year).
Source: Graintrade