The speculative decline in wheat prices accelerated, leading to a decline in export demand for wheat in Ukraine

Global wheat market remains under the control of speculators who react to the news about the weather, sharply increasing or decreasing the volume of purchases or sales of futures.

Yesterday, wheat prices continued to fall and dropped by 2.7-3.8% per day, falling by 7.2-16.6% for the month to levels lower than they were in early 2024, when the price decline began, which ended with a sharp 30% increase in March-May.

On Monday, the July wheat futures fell:

– by 3.7% to $217.3/t for SRW wheat in Chicago (-16.6% for the month),
– by 3.8% to $222.5/t for HRW wheat in Kansas City (-15.6%),
– by 2.7% to $234.6/t for HRS wheat in Minneapolis (-16%),
– by 2.8% to €230.25/t or $247/t for September wheat futures on Euronext in Paris (-7.2%).

Reasons for the fall in prices were the rains in Russia, increased production forecasts in Australia and Argentina, high rates of harvesting in the United States, as well as improving the condition of spring wheat in the United States.

The pressure on the markets was further increased by the announcement of the National Bureau of Statistics of China about the expectation of a record grain harvest this year.

According to the NASS USDA, as of June 16, winter wheat in the U.S. was harvested on 27% of the area, compared to 13% last year and 14% on average for 5 years. The condition of winter wheat for the week improved by 2% to 49% (good and excellent) against 38% last year, and spring wheat – by 4% to 76% against 51% last year.

Rains in the Central part of Russia will not improve the potential of the winter wheat harvest, but will help in the development of spring wheat.

As of June 10, the sowing of spring wheat in Russia was carried out on the area of 12.3 mln hectares (92.3% of the plan), which is 1.3 mln hectares less than in 2023. As a result, the Russian Union of Grain Exporters continues to lower its forecast for the Russian wheat harvest to 79.3 mln tonnes, down 17% from last season, and the export forecast is lowered to 40 mln tonnes, down 33%. This factor may later contribute to the growth of quotations again.

Ukraine has started harvesting early grain crops, and the first yields are still significantly lower than last year.

Acting Minister of Agriculture Taras Vysotsky raised his forecast for Ukraine’s wheat harvest to 21 million tons and his export forecast to 15 million tons amid improved weather conditions in June. The European agency MARS estimates the wheat harvest in Ukraine in 2024/25 MY at 20.6 mln tonnes, down 25% from last season and 25% from the 5-year average. The area is estimated at 5 million hectares, which is 24% less than the 5-year average.

During the week, the purchase price of wheat in Ukraine continued to fall and lost about $5-8/t to $200-205/t for milling wheat and $185-190/t for feed wheat with delivery to the ports of the black sea, but yesterday traders stopped buying in anticipation of stabilization of prices on the exchanges.

As of June 17, 2023/24 marketing year, Ukraine has already exported 18 million tons of wheat, up 1.7 million tons compared to last year. By the end of the season, Ukraine is expected to supply another 400-500 thsd tonnes, exceeding the USDA forecast of 17.5 mln tonnes.

Tags: Ukraine, prices, wheat