Frost and lower crop forecast in Russia accelerate wheat price growth, including in Ukraine

On the world markets, the speculative growth of wheat prices continues, which increased by 14.6-21% during the month amid frosts in the EU and Russia and the USDA’s forecasted reduction of world stocks in 2024/25 MY.

Frosts down to -3…-8 oC slightly damaged spring wheat crops in the Voronezh and Kursk regions and became a speculative factor in supporting prices, as well as the recent frosts in Northern Europe, which damaged rapeseed crops, although there is still no data on losses.

Wheat quotations, which after the USDA report rose by 2-4% yesterday rose by another 2.5-4% amid the forecast of the Agency IKAR on the reduction of the wheat harvest in Russia from 91 to 86 million tons (88 million tons in the USDA report).

July futures for wheat of the new harvest yesterday rose:

• by 3.5% to 252.4 $/t – for soft winter SRW wheat in Chicago (+5.7% for the week, +21% for the month, 242.8 $/t a year ago),
• by 4% to 257.2 $/t – for hard winter HRW wheat in Kansas City (+3.7%, +20.7%, 330.1 $/t),
• by 2.5% to 271.3 $/t – for hard spring HRS wheat in Minneapolis (+1.8%, +14.6%, 320.9 $/t),
• by 3.7% to 258.75 €/t or 279.1 $/t – September wheat futures on the Paris Euronext (+5.5%, +19.2%, 239.5 €/t).

Last year, wheat prices also rose sharply based on the report’s data and amid delayed sowing, but declined in the second half of the season due to slow exports and buyer demand.

According to the NASS USDA, in the United States in the period of May 6-12, the number of winter wheat crops in good or excellent condition remained at 50% (29% last year), and spring wheat was planted on 61% of the planned areas (35% last year and 48% on average for 5 years).

Wheat exports for May 3-9 increased by 8% to 339 thsd tonnes compared to the previous week, and totaled 17.65 mln tonnes in the season, down 5.81% from last year.

Ukraine exported 16.41 mln tonnes of wheat in 2023/24 MY (up 9.6% compared to last year), including 634 thsd tonnes in May 1-13 (582 thsd tonnes in the same period in 2023). In the May USDA report, the forecast of wheat exports from Ukraine remained at 17.5 mln tonnes, and for Russia increased from 52 to 53.5 mln tonnes amid active supplies. At the same time, for 2024/25 MY the export forecast for Ukraine was lowered to 14 mln tonnes, and for Russia – to 52 mln tonnes.

Export demand prices in Ukraine, following the world prices, increased by 500-600 UAH/t for feed wheat to 7800-7900 UAH/t or 175-178 USD/t, and by 400-500 UAH/t for milling wheat to 8300-8500 UAH/t or 190-194 USD/t with delivery to the Black Sea ports. They are supported by a sharp rise in prices for European wheat, which reached 270-280 USD/t with delivery to buyers, which is equivalent to 220-230 USD/t FOB – Ukrainian ports of the Black Sea.

High export prices and forecasts of reduced harvest support high prices for new crop wheat, but it is necessary to take into account the significant stocks in Russia and Kazakhstan, as well as the decline in world demand.

Traders have not yet paid attention to the forecasts of good harvests in importing countries (especially Russian wheat). Thus, the Ministry of Agriculture of Iran announced that it will not import wheat until March 2025, as its own harvest will reach 10.5 mln tonnes (7.5 mln tonnes in 2022/23 MY and 4.5 mln tonnes in 2021/22 MY). In addition, the Ministry of Agriculture of Iraq forecasts that the wheat harvest in 2024 will exceed 7 mln tonnes, while the domestic demand is 4.5-5 mln tonnes of wheat per year.

Tags: Ukraine, Russia, Kazakhstan, prices, wheat, USA