Wheat market prices are on the rise as positive news continues to influence stock prices, leading traders to actively purchase wheat futures.
Reduced Forecasts for Russian Wheat Production
Experts from Rusagrotrans have adjusted their forecast for wheat production in the Russian Federation for the 2024/25 marketing year, reducing it from 92-96 million tons to 77.4 million tons. Other analysts have similarly estimated production to be between 81-83 million tons. Additionally, the wheat export forecast was cut by 6 million tons to 43 million tons.
Potential Tariff Changes in India
The Indian government may lift a 40% tariff on wheat imports following parliamentary elections on June 4. This move aims to restore wheat supplies, halt rising prices, and replenish state stocks, which fell to a 16-year low of 7.5 million tons in April after the government sold 10 million tons of grain to flour mills to stabilize prices pre-election. India’s last wheat import occurred in the 2017/18 fiscal year. Experts predict India’s wheat crop this year will fall 6.25% short of the projected 112 million tons, necessitating imports of 3-5 million tons, with domestic prices potentially exceeding the state-mandated minimum purchase price of 22,750 rupees per ton ($273/t).
Impact of Recent Tenders on Prices
The results of recent tenders have also supported wheat prices. According to StoneX, flour mills in Taiwan purchased 97,000 tons of food wheat from the US at prices ranging from $273 to $325 per ton FOB for July-August shipment. Similarly, importers in Thailand bought 60,000 tons of feed wheat of various origins at nearly $300 per ton C&F for early June shipment.
Potential Price Moderation from Iran and Australia
Conversely, news from Iran and Australia may exert downward pressure on wheat prices. According to Iran’s Ministry of Agriculture, the country plans to cease wheat imports by March 25, 2025, as domestic production will meet demand. In the 2023/24 marketing year, Iran harvested 10.5 million tons of wheat and imported only 1 million tons. This is a significant change from the 2021/22 marketing year, when the harvest was 4.5 million tons, leading to imports of 7 million tons. In the 2022/23 marketing year, production reached 7.5 million tons, reducing imports to 3 million tons.
In Australia, favorable rains have benefited most agricultural regions, with more rainfall expected due to the La Niña phenomenon, which will likely enhance the wheat harvest potential.
The wheat market is experiencing a complex interplay of factors that are driving prices up while also presenting potential for future moderation. Reduced production forecasts in major producing countries like Russia, coupled with possible tariff changes in India, have contributed to the current price surge. However, developments in Iran and favorable weather conditions in Australia could introduce elements of price stabilization in the coming months. Traders and stakeholders should remain vigilant to these evolving conditions to navigate the market effectively.