Market Overview
Wheat prices saw a significant decline last week, falling by another 1.8-2% and marking an overall decrease of 6.5-8.2% for the week. This drop follows a two-month speculative rise in wheat prices due to reduced yields in Russia. The recent decline was driven by traders taking profits and further accelerated by news from Türkiye and Egypt regarding their wheat import policies.
Impact of Turkish and Egyptian Decisions
Türkiye’s Ministry of Agriculture and Forestry announced a wheat import ban from June 21 to October 15, 2024, aimed at supporting local grain producers. This decision is backed by a good grain harvest and high carryover stocks within the country. Conversely, Egypt’s Minister of Supply and Internal Trade, Ali Al-Moselhi, revealed plans to cut wheat imports by 17% to 5 million tons for 2024, down from the previously anticipated 6 million tons. This reduction is due to increased domestic purchases and higher prices for subsidized bread, which lessens the country’s import needs.
Market Reactions
Following these announcements, wheat futures experienced notable declines:
- SRW Wheat in Chicago: Fell by 2% to $230.6/t (-8.2% for the week).
- HRW Wheat in Kansas City: Dropped by 1.8% to $244.6/t (-6.5%).
- HRS Wheat in Minneapolis: Decreased by 1.8% to $255.2/t (-6.6%).
- September Wheat Futures on Euronext in Paris: Declined by 3% to €243.75/t or $262/t (-6.4%).
Factors Contributing to Price Decline
In addition to the decisions from Türkiye and Egypt, Russia’s Deputy Minister of Agriculture announced the reseeding of 800 thousand hectares of spring crops and minimized the impact of frost on production, further contributing to the price decline.
Effects on Ukrainian Wheat Prices
In Ukraine, wheat purchase prices fell by $3-5/t after reaching a season-high of 9700-10000 UAH/t ($215-220/t) for food wheat and 9100-9300 UAH/t ($198-203/t) for feed wheat with delivery to Black Sea ports. Despite the drop, limited old crop supplies and active exports continue to support high price levels.
Export Performance
As of June 7, in the 2023/24 marketing year, Ukraine had exported 17.65 million tons of wheat, 2 million tons more than the previous year. By the end of the season, an additional 400-500 thousand tons are expected to be shipped, surpassing the USDA forecast of 17.5 million tons.
The recent decisions by Türkiye and Egypt to reduce wheat imports have significantly impacted global wheat prices, reflecting the interconnected nature of agricultural markets. As major importers adjust their policies to support local production and manage economic challenges, the ripple effects are felt across global supply chains. Stakeholders should stay informed and adaptable to these changes, ensuring strategies are aligned with the evolving market conditions.