Adverse weather conditions in the USA, China and Russia led to a speculative increase in wheat prices by 2.5-4.6% per day

Wheat prices rose sharply yesterday by 2.5-4.6% to their highest levels in 1-3 months amid information about adverse weather in the US, China, and Russia and news about the possible involvement of the US in a war between Israel and Iran.

In the two largest wheat-producing regions of Russia (Krasnodar and Rostov), a state of emergency has been declared in some areas affected by drought.

Wheat harvesting is underway in China, but there is information that the harvest will be smaller than predicted due to drought.

In the southern plains of the United States, prolonged rains are delaying the harvest of winter red wheat and leading to lower wheat condition estimates in some areas.

As of June 16, only 3% of the acreage in Kansas has been threshed (compared to 11% on a five-year average), 30% (46%) in Oklahoma, and 56% (57%) in Texas. Hot weather is forecast this week, followed by another wave of rain later in the week that will help spring crops but again delay the winter wheat harvest.

July wheat futures in the US rose yesterday:

• by 4.6% to $211/t for SRW wheat in Chicago,
• by 4.3% to $209.9/t for HRW wheat in Kansas City,
• by 2.5% to $237.5/t for HRS wheat in Minneapolis,
• by 3% to €208/t or $238.5/t – September wheat futures on the Paris Euronext exchange.

EU soft wheat exports in MY 2024/25 remain at a low level of 19.76 million tonnes, 34% below last year’s pace (29.91 million tonnes), but these data are still incomplete as information from France and Bulgaria is delayed.

European wheat quotes were supported by the results of a tender in Algeria, where the state-owned company OAIS on June 17 purchased 550-570 thousand tons of mainly Black Sea wheat from Romania, Bulgaria and Ukraine for delivery on August 10-30 at a price of $244.5-245/ton C&F.

In Ukraine, the first threshing of barley and wheat in Mykolaiv and Kherson regions showed low yields, which increases pressure on markets, but export demand prices for the new crop remain at $207–210/t or UAH 9,600–9,800/t for food wheat, and $197–198/t or UAH 9,200–9,300/t for feed wheat.

The wheat market will remain under the pressure of speculation on weather news until the end of July, and only after more accurate crop estimates appear in the main exporting countries will significant fundamental changes be possible.

Tags: Ukraine, prices, wheat