US wheat futures fell to the lowest level since September 2021

Forecasts of an increase in the area of wheat sowing in the USA and Canada against the background of negotiations on the continuation of the grain corridor from Ukraine increase the pressure on stock market quotations for wheat.

Wheat prices fell 1-2.4% yesterday, with wheat futures in Chicago and Kansas falling to their lowest since September 2021, including:

• by 2% or $4.96/t to $255.5/t – May futures for soft winter SRW wheat in Chicago (0% for the week);
• by 2.4% or $6.8/t to $293.1/t – May futures for HRW hard winter wheat in Kansas City (-3.2%).
• by 1.1% or $3.67/t to $317/t – May futures for hard spring HRS-wheat in Minneapolis (-0.8%).
• by 0.4% or $1.25/t to $291.5/t – May futures for Black Sea wheat in Chicago (-2%).
• by 1.5% or 4 €/t to 271.25 €/t or $290/t – May wheat futures on Paris Euronext (-2.2%).

Rainfall in U.S. winter wheat growing regions has improved crop condition, but according to Crop Progress from NASS, 17% of crops in Kansas are in good or excellent condition and 19% in Texas, significantly lower than last year.

According to the USDA, wheat exports from the United States for the week amounted to 268 thousand tons (84 thousand tons to Mexico and 68 thousand tons to China), and in general for the season reached 15.582 million tons compared to 15.913 million tons last year. To reach the projected 21 million tons, traders need to export another 5.5 million tons of wheat by June 1, or 400-450 thousand tons every week, which will be difficult to do without lowering prices.

On the eve of the release of the new USDA report, analysts have released their own forecasts, where they expect a decrease in the world’s final stocks of wheat. Traders are worried about the forecasts of the wheat harvest in the new season, which are still somewhat worse than last year.

In the current season, Ukraine exported 11.43 million tons compared to 18.3 million tons last year. In order to reach the USDA forecast of 13.5 million tons, another 2 million tons of wheat must be exported by the end of June. Taking into account the line-up of ships waiting in line for loading, it is planned to export 0.8-1 million tons of wheat in March, so in April – May it will be necessary to ship another 1 million tons, which will not create competition for American wheat, the export of which is slow.

The purchase prices for food wheat in Ukraine remain at the level of $205-210/t SRT under the pressure of low export demand due to a strong delay in the actions of the courts and fears of traders to resume purchases until the issue of the operation of the grain corridor is resolved. However, the continuation of the grain agreement will restore demand, and prices will rise to the level of January – $220-225/t SRT port.

Tags: Ukraine, prices, wheat, USA