Falling wheat prices did not stop the downgrading of the forecast for Kazakhstan and Egypt’s purchases

The correction in wheat prices after a sharp previous decline has ended, and they fell again yesterday by 1.2-2.6% in anticipation of the USDA’s October report. Quotations were not supported even by the new purchase of wheat by Egypt and the lowering of the harvest forecast for Kazakhstan.

Yesterday it became known that on October 10, GASC purchased 500,000 tons of wheat for delivery in November-December at a price of $265/ton FOB in private negotiations. In January – September 2023, Egypt imported 8.34 million tons of wheat, which is 30% higher than the corresponding indicator of 2022 – 6.43 million tons. Almost 80% of this volume was delivered from the Russian Federation, since cheap logistics and the proposed low prices allow Egypt to increase purchases in the Russian Federation

According to MARS, heavy rains in August and early September in the northern and eastern regions of Kazakhstan made it difficult to harvest spring crops, reduced grain quality and yield. In addition, the heat and lack of precipitation at the beginning of the season negatively affected the outlook for the harvest in the main wheat growing regions. It is expected that compared to last year, the production of wheat in the country will decrease by 25% to 12.3 million tons (8% lower than the 5-year average), in particular, spring – by 26% to 11.3 million tons (-8% ), and winter – by 3% to 1 million tons (+5%), and the average yield – by 25% to 1 t/ha (-15%).

According to NASS USDA data, as of October 8, 57% of the area was planted with winter wheat in the US, which corresponds to the 5-year average and increases the pressure on quotations.

The export of wheat from the USA in the current season amounted to 6.487 million tons, which is 43% or 2.8 million tons lower than last year’s pace. In the current season, the EU reduced wheat exports by 23% compared to last year to 8.13 million tons, while the Russian Federation increased it by 61% to 18.18 million tons.

Yesterday, December futures fell in price:

• by 2.6% to $205.2/t – for soft winter SRW wheat in Chicago,
• by 2.2% to $246.6/t – for hard winter HRW wheat in Kansas City,
• by 1% to $265.8/t – for HRS durum wheat in Minneapolis,
• by 1.2% to €234.5/t or $248.6/t – for wheat on the Paris Euronext.

In Ukraine, as of October 10, only 2.3 million hectares of the forecasted 4-4.5 million hectares (4.2 million hectares last year) were sown with winter wheat due to unfavorable weather and low wheat prices. Farmers are reducing the area of sowing and are not in a hurry to sell wheat at low prices, hoping for a rise in prices against the backdrop of lower crop forecasts for the next season, especially given the increased drought in the south-west of the Russian Federation.

Tags: Kazakhstan, wheat