Price Declines Amid Favorable Conditions
Wheat prices on global exchanges continued their decline, falling by 2.5-6% over the past week, completely nullifying the growth seen since early May. This drop is attributed to active winter wheat harvesting, favorable conditions for the planting and development of spring wheat in the United States, and forecasts of precipitation in key agricultural regions of Ukraine and southwestern Russia.
Weekly Price Movements
On Friday, July wheat futures experienced the following declines:
- SRW wheat in Chicago fell by 1.2% to $224.9/t (-2.5% for the week),
- HRW wheat in Kansas City dropped by 1.5% to $230.6/t (-6% for the week),
- HRS wheat in Minneapolis decreased by 1.8% to $240.9/t (-5.9% for the week),
- September wheat futures on Euronext in Paris fell by 0.7% to €236.75/t or $253/t (-3% for the week).
Impact of Russian Exports
The sharp rise in wheat prices on exchanges has benefited Russian exporters, who have continued to increase wheat exports in June. The spread between French and Russian wheat reached $25/t, boosting demand for Russian wheat. The analytical center “SovEcon” forecasts that Russian wheat exports in June will amount to 3.5-4.0 million tons compared to 3.6 million tons a year earlier and 1.6 million tons on average.
Market Challenges for the US and EU
With the start of the new harvest, sellers from the US and the EU will face a decrease in demand for wheat due to aggressive export policies from Russia. Additionally, Turkey’s decision to suspend wheat imports from June 21 to October 15, 2024, will reduce demand for Russian wheat. India’s new Minister of Agriculture confirmed that the government will not lift import duties on wheat to support local farmers.
Production Forecasts in Australia and Argentina
Increased production forecasts in Australia and Argentina, amid favorable planting conditions, are also putting pressure on prices. The Rosario Grain Exchange raised its forecast for wheat production in Argentina for the 2024/25 marketing year to 21 million tons from 15.85 million tons this season. This increase is due to an expansion of sowing areas to a record 6.92 million hectares, driven by the need for crop rotation in central and northern parts of the country.
The recent decline in wheat prices highlights the volatility of the market and the significant impact of favorable weather conditions and aggressive export policies. Market participants will need to stay informed and adapt to these changing conditions to navigate the challenges ahead.
Wheat feed grade FCA Odessa
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