Wheat markets remain stable despite worsening weather in the US, Kazakhstan and Russia

The presidents of Ukraine and Turkey discussed the necessity of extending the grain agreement over the weekend. News that Ukrainian wheat may continue to enter the world market pushed prices lower on Monday, although traders are now paying more attention to dry conditions in the US, Kazakhstan and the Russian Federation, which are reducing the potential for spring wheat harvests.

In the winter wheat growing regions of the United States, heavy rains are delaying the harvest and degrading the quality of the grain. According to Crop Progress from NASS, as of July 9, winter wheat in the USA is harvested on 46% of the area (62% last year and 59% on average for 5 years on this date), in particular in Kansas – on 59% of the area (93% last year).

The number of spring wheat crops in good or excellent condition for the week decreased by another 1% to 47% (70% last year), and the most – in the states of Montana and South Dakota.

From June 30 to July 6, the export of wheat from the USA increased by 22% compared to the previous week to 419 thousand tons, and from June 1 it already amounted to 1.519 million tons (1.92 million tons last year on this date).

Rains in the Krasnodar region of the Russian Federation delay harvesting and worsen the quality of winter wheat, while a state of emergency has been introduced in the Volga and Novosibirsk regions due to soil drought. Dry and hot weather for the next two weeks in Siberia, the Urals and the southern Volga region will reduce the spring wheat harvest potential.

In some regions of Kazakhstan, wheat crops also suffer from dry conditions.

The increase in wheat exports from the Russian Federation for the first week of the 2023/24 MR compared to the same period of the previous season by 95% to 938 thousand tons will put pressure on the world market, but export demand prices for Russian wheat with a protein content of 12.5% and delivery in July remain at levels of $230-235/t FOB.

September wheat futures fell yesterday:

• by 0.5% to $235.8/t – for soft winter SRW wheat in Chicago (+0.7% for the week),
• by 0.9% to $292.7/t – for hard winter HRW wheat in Kansas City (+1.8%).
• by 0.1% to $235.75/t – for Black Sea wheat in Chicago (-0.6%).
• by 1.2% to €266.25/t or $252.2/t – for wheat on the Paris Euronext (+1.5%).

Hard spring HRS wheat in Minneapolis rose by 0.3% to $312.4/t (+5% for the week).

In Ukraine, procurement prices for food wheat for delivery to Danube and Black Sea ports remain at a low level of $160-170/t, while demand prices for barley are rising amid a supply shortage as farmers are unwilling to sell at a low price.

Based on satellite data, NASA Harvest experts (a food security and agriculture program) estimate wheat production in Ukraine at 25-26.5 million tons, of which 21-22 million tons will be collected in controlled territories, and another 4.1-4 .4 million tons – for the occupied, that is, it will be stolen and exported to the Russian Federation.

In the first week of the 2023/24 FY, Ukraine exported 177,000 tons of old-crop wheat (52,000 tons last year), as the new crop is just beginning to be harvested.