Wheat Prices Surge Amidst Russian Harvest Forecast Reduction and Freezes

Wheat Prices Surge Amidst Russian Harvest Forecast Reduction and Freezes

Mintec Global
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Speculative Growth and Frost Impact

Wheat prices have experienced a significant surge on world exchanges, driven by speculative growth and weather-related concerns. Recent frosts in the EU and the Russian Federation, with temperatures dropping as low as -3 to -8°C, have raised apprehensions about crop damage. In Russia, the Voronezh and Kursk regions saw slight damage to spring wheat crops due to the frost, further fueling price hikes.

Futures Prices and Market Response

Following the USDA report projecting a reduction in global stocks for the 2024/25 marketing year (MY), wheat quotations continued to rise.July futures for new harvest wheat witnessed notable increases across various exchanges.
Prices surged by:

  • 3.5% to $252.4/t for soft winter SRW wheat in Chicago,
  • 4% to $257.2/t for HRW hard winter wheat in Kansas City, and
  • 2.5% to $271.3/t for HRS durum spring wheat in Minneapolis.

Export Trends and Forecasts

Export dynamics play a crucial role in shaping wheat prices. In Ukraine, wheat exports totaled 16.41 million tons in the 2023/24 MY, marking a 9.6% increase from the previous year. Despite active export supplies, the export forecast for Ukraine in the 2024/25 MY has been reduced to 14 million tons. Conversely, the export forecast for the Russian Federation has been increased to 53.5 million tons for 2023/24 MY.

The surge in wheat prices is attributed to a combination of factors, including frost-induced concerns in major wheat-producing regions and speculative trading. Market participants remain cautious amid uncertainties surrounding crop conditions and export demands. Additionally, forecasts of reduced harvests and fluctuating global demand further contribute to the volatility in wheat prices. Traders are advised to closely monitor weather patterns, export trends, and harvest forecasts to gauge potential price movements in the wheat market.