Wheat prices fall on US rainfall forecasts and tender results in Egypt

World wheat prices are down under pressure from rain forecasts in the wheat-growing regions of the US (Kansas, Nebraska, North and South Dakota) and in anticipation of the June USDA report, which may increase the estimate of stocks.

HRW durum wheat quotes in Kansas fell 4.3% in anticipation of harvest and heavy rains next week.

Egypt’s GASC purchased 55,000 t of Russian wheat from Agric SA at a tender on June 6 at $244.5/t C&F ($229/t FOB + $15.5/t freight), while Saudi Arabia purchased wheat a few days ago at $261.76/t C&F. However, analysts believe that the tender will not be confirmed, as the seller could try to withdraw its offer, even after receiving a penalty for doing so.

Applications were submitted for the tender:

• from the Russian Federation – one batch at $244.5/t C&F and 12 offers at $254.5-262.5/t C&F,
• from Romania – 3 batches at the price of $255, $260 and $262/t C&F,
• from France – 2 lots at $259.82 and $262/t C&F.

According to experts, the Russian MSG warned traders that the minimum selling price for Russian wheat should be $240/t FOB, so all tendered offers had a price of $240/t FOB, except for one lot, which was offered at today’s market price of $229 /t FOB.

Yesterday, July futures fell:

• by 1.8% to $226.6/t – for soft winter SRW wheat in Chicago,
• by 4.3% to $289.5/t – for hard winter HRW wheat in Kansas City,
• by 2.9% to $291.7/t – for hard spring HRS-wheat in Minneapolis,
• by 0.5% to $250.25/t – for Black Sea wheat in Chicago,
• by 1% to €228/t or $244/t – September wheat futures on the Paris Euronext.

Traders are monitoring the situation in the east of the Russian Federation and in Kazakhstan, where dry and hot weather prevails. The wheat harvest in Siberia and the Volga region may be lower than the annual average, not to mention last year’s record. Air temperatures in Siberia, the Volga (mainly on the left bank) and the Urals are 4-10 ^o C higher than the norm, and the amount of precipitation in the last two months was only 32% of the norm. Rain is expected in the region next week, but it will be light.

The consequences of the destruction of the Kakhovskaya hydroelectric dam by the Russians for the agriculture of southern Ukraine are still difficult to assess, since the territories are occupied. However, it is already clear that crops in irrigated fields will suffer immediately, and the change in ecology in the region will lead to a decrease in harvests in the following years.