Severe Christmas frosts in the USA led to a speculative increase in wheat prices

The cold polar front brought frosts of -20…-25 ^o C to the Midwest and the US Plains with strong winds and snowfall, which led to a speculative increase in quotations due to the threat of damage to winter wheat crops that are not covered by a sufficient layer of snow.

However, since Monday, positive temperatures are expected, so the quotations increased by only 1-2.6%, and in general traded a little lower than a year ago.

On Friday, stock quotes rose:

• by 1.8% or $5.05/t to $285.1/t – March futures for soft winter SRW wheat in Chicago (+3.8% for the week and -4.9% for the year ),
• by 1% or $3.22/t to $321.4/t – March HRW hard winter wheat futures in Kansas City (+3.6% for the week and +2.5% for the year),
• by 1% or $3.49/t to $342.4/t – HRS hard spring wheat March futures in Minneapolis (+2.5% for the week but -10.2% for the year),
• by 0% to $309.75/t – January futures for Black Sea wheat in Chicago (-0.2% for the week and -11% for the year),
• by 2.6% or €8/t to €311.75/t or $330.9/t – March wheat futures on Paris Euronext (+4.7% for the week and +1.9% for the year ).

Prices are pressured by FAS USDA data on the low pace of export sales of wheat from the USA, which for the week of December 9-15 amounted to only 334 thousand tons, and in general for the season 14.44 million tons, while the actual export of wheat for the week amounted to 235 thousand tons, and in general in the season – 10.24 million tons, out of the 21.09 million tons predicted for 2022/23 MR.

In Argentina, according to the BAGE exchange, as of December 22, 9.3 million tons of wheat were threshed from 78.3% of the area with an average yield of 2.19/ha, which confirms the pessimistic harvest forecasts.

The market remains under pressure from a significant supply of Russian wheat, much of which will be available in the second half of the season. According to estimates by the Rusagrotrans agency, in the first half of 2022/23, the Republic of the Russian Federation will export 24 million tons of wheat (2.3 million tons more than in the same period last year) out of the forecasted 43.5 million tons. If earlier in the first half of the season, the country exported 65 -70% of the harvest, this year it will be only 55%.

Against the background of the depreciation of the ruble, the export duty on wheat in the Russian Federation will increase by 24.8% to 4,160.9 rubles/t from December 28, while the indicative price will decrease from $314.4 to $312.8/t.

In Ukraine, according to the Hydrometeorological Center, as of December, almost 65% of winter wheat crops were in good or excellent condition, which corresponds to the average statistical level, while last year the condition of crops during this period was much worse. A warm December improved the condition of some crops in the south thanks to rainfall and positive temperatures.

Tags: prices, wheat, USA, crop condition