Wheat prices on global exchanges, after hitting record lows on Monday, saw a significant rebound during the following sessions, rising by 3.9% to 6.3%. This recovery comes on the heels of forecasts predicting a decrease in wheat harvests in both the European Union and the Russian Federation. Despite this uptick, current wheat prices are still 1.3% to 7% below the levels observed at the end of July.
EU and Russia Face Lower Harvest Projections
The European Commission has revised its forecast for the soft wheat harvest in the EU for the 2024/25 marketing year, reducing it from 120.8 million tons to 116.1 million tons. This is a notable decrease from the 125 million tons harvested in the 2023/24 season. Additionally, the Commission lowered its export forecast from 32 million tons to 26 million tons, down from 35.1 million tons in the previous marketing year.
In Germany, excessive rainfall has led to a projected 12.7% decrease in wheat production, bringing the total down to 18.8 million tons. The quality of the grain is also expected to deteriorate, with a particular decline in protein content, according to forecasts from the German Ministry of Food and Agriculture (MSG).
Meanwhile, SovEkon experts have adjusted their wheat harvest forecast for the Russian Federation, reducing it by 0.8 million tons to 82.5 million tons. This revision is attributed to lower-than-expected yields in the Central and Volga regions.
French Wheat Exports and Global Impact
The Argus agency predicts that France will export only 4.1 million tons of wheat outside the EU in the 2024/25 marketing year. This figure is significantly lower than the five-year average of 10 million tons, highlighting the challenges faced by one of Europe’s largest wheat producers.
Futures Market Reactions
In response to these developments, September futures for various types of wheat experienced fluctuations:
- Soft Winter SRW Wheat in Chicago: Fell by 1.4% to $195.75 per ton, but rose by 6.2% for the week, remaining 1.3% down for the month.
- Hard Winter HRW Wheat in Kansas City: Dropped by 1.3% to $203 per ton, up 6.3% for the week, but down 1.4% for the month.
- Hard Spring HRS Wheat in Minneapolis: Declined by 2% to $210.8 per ton, up 3.9% for the week, though 3.6% lower for the month.
- Wheat on the Paris Euronext: Decreased by 1.7% to €205.75 per ton ($227.27 per ton), showing a 5.8% increase for the week, but a 7% drop for the month.
Traders are now shifting their focus to December futures, which are currently trading 2.2% to 5.2% higher than the September futures, suggesting ongoing market volatility as wheat balances continue to be updated.
Wheat Market Faces Uncertain Times
The recent fluctuations in wheat prices highlight the ongoing uncertainty in the global market. With significant reductions in harvest forecasts for key producers like the EU and Russia, and the anticipation of tighter supplies, the market is likely to remain volatile in the coming months. As traders pivot to December futures, we can expect continued reactions to updated wheat balances, making it crucial for market participants to stay informed and agile.
The rebound in wheat prices, following the bleak harvest forecasts from the EU and Russia, underscores the delicate balance in the global wheat market. As we move into the final quarter of the year, the focus will be on how these reduced harvests play out in the broader market context. The potential for further price shifts remains high, and staying ahead of these developments will be key for those involved in the trade.
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