Global Wheat Market Volatility
The global wheat market remains highly volatile, driven by speculative trading that reacts sharply to weather-related news. Recently, this volatility has led to a significant decline in wheat prices.
Sharp Decline in Wheat Prices
On Monday, wheat prices experienced a substantial drop, falling by 2.7-3.8% in just one day. Over the past month, prices have decreased by 7.2-16.6%, reaching levels lower than those at the beginning of 2024. This decline follows a period of price increases that culminated in a 30% rise between March and May.
Monday’s Wheat Futures Performance:
- SRW wheat in Chicago: -3.7% to $217.3/t (-16.6% for the month)
- HRW wheat in Kansas City: -3.8% to $222.5/t (-15.6%)
- HRS wheat in Minneapolis: -2.7% to $234.6/t (-16%)
- September wheat futures on Euronext in Paris: -2.8% to €230.25/t or $247/t (-7.2%)
Factors Contributing to Price Decline
Improved Weather Conditions and Production Forecasts
Several factors have contributed to the recent decline in wheat prices:
- Rains in Russia
- Increased production forecasts in Australia and Argentina
- High harvesting rates in the USA
- Improved spring wheat crop conditions in the USA
Additionally, a forecast from a representative of China’s National Bureau of Statistics predicts another record grain harvest this year, adding further pressure on wheat prices.
Harvest Progress in the USA
According to the USDA’s National Agricultural Statistics Service (NASS), as of June 16, winter wheat in the USA was harvested on 27% of the area compared to 13% last year and 14% on average over five years. The condition of winter wheat improved by 2% over the week to 49% (good and excellent) compared to 38% last year, and spring wheat by 4% to 76% compared to 51% last year.
Impact of Russian and Ukrainian Harvests
Rains in central Russia will no longer improve the potential yield of winter wheat but will aid in the development of spring wheat. As of June 10, spring wheat planting in Russia was completed on 12.3 million hectares (92.3% of the plan), which is 1.3 million hectares less than in 2023. Consequently, the Russian Grain Exporters Union continues to lower its forecast for wheat production in Russia to 79.3 million tons, 17% less than last season, and has reduced the export forecast to 40 million tons, 33% less. This factor may later turn the prices upward again.
Ukraine’s Early Grain Harvest
In Ukraine, the early grain harvest has begun, and the initial yield data are currently much lower than last year’s. Acting Minister of Agriculture Taras Vysotsky raised the wheat harvest forecast in Ukraine to 21 million tons and the export forecast to 15 million tons against the backdrop of improving weather conditions in June. The European agency MARS estimates the wheat harvest in Ukraine for the 2024/25 marketing year at 20.6 million tons, which is 25% less than last season and 25% below the five-year average. The area is estimated at 5 million hectares, 24% less than the five-year average.
Decline in Wheat Purchase Prices in Ukraine
During the week, wheat purchase prices in Ukraine continued to fall, losing another $5-8/t to $200-205/t for food wheat and $185-190/t for feed wheat with delivery to Black Sea ports. However, traders halted purchases in anticipation of price stabilization on the exchanges.
Export Data
As of June 17, in the 2023/24 marketing year, Ukraine has already exported 18 million tons of wheat, 1.7 million tons more than last year. By the end of the season, another 400-500 thousand tons are expected to be shipped, exceeding the USDA forecast of 17.5 million tons.
The recent decline in wheat prices highlights the volatility and sensitivity of the global wheat market to speculative trading and weather conditions. The market will need to closely monitor these factors to navigate the ongoing fluctuations effectively.
Wheat feed grade FCA Odessa
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