Rising prices for corn and soybeans due to possible harvest cuts in the US are supporting wheat quotes

Rising prices for corn and soybeans due to possible harvest cuts in the US are supporting wheat quotes, but their growth is limited by low demand in the physical market.

Egypt’s purchase of a batch of Russian wheat without holding an international tender increased the pressure on prices, as this year due to the record harvest Russia can export 25-30% more wheat than last year.

Egypt’s GASC continues to buy grain without holding international tenders and has now purchased 240,000 tonnes of Russian wheat from GTCS at a price of $368/t C&F, which is 8% lower than the last purchase in July.

 Since the new financial year, GASC has purchased 1.8 million tonnes of wheat through tenders and direct purchases, bringing Egypt’s strategic wheat stocks to 7 months, compared to the usual target of 6 months.

Following the rapid rise in corn prices in the US, wheat quotes also rose:

• by 1.6% or $4.5/t to $292.1/t – September futures for soft winter SRW wheat in Chicago,
• by 1.6% or $5.05/t to $329.3/t – September HRW hard winter wheat futures in Kansas City,
• by 1.5% or $5.05/t to $333.5/t – September HRS durum wheat futures in Minneapolis.

At the same time, news from Egypt decreased:

• by 0.7% or $2.5/t to $340.5/t – September futures for Black Sea wheat in Chicago,
• by 1% or €3/t to €329.25/t or $328.9/t – September wheat futures on Paris Euronext.

At the end of August, traders are waiting for an updated StatsCan report with estimates of wheat production in Canada, which analysts now estimate at 34 million tons, USDA at 35 million tons, MSG of Canada at 34.5 million tons, while last year due to a severe drought, the wheat harvest was only 21.6 million tons. However, the 8.7% increase in sowing area and favorable weather conditions may lead to an unexpectedly large increase in the harvest.