Wheat futures on Euronext rose to a 14-month high, which supports prices in Ukraine

On Monday, the U.S. stock exchanges were closed in observance of Memorial Day, while wheat prices continued to rise sharply on the Paris stock exchange on the back of forecasts of a reduced harvest in Ukraine, Africa and Russia.

According to the MARS monitoring of May 27, drought in western North Africa, especially in Morocco and northwestern Algeria, will lead to a sharp decline in wheat yields, which will increase the need for imports.

the September wheat futures on the Paris Euronext yesterday rose by almost 3% to a 14-month high of 269 €/t or 292,6 $/t (+4.9% for the week, +14.3% for the month).

Traders are worried about the forecasts of decline in wheat production in Ukraine and Russia, so they have not yet responded to the increase in the experts MARS estimates of wheat yields in the EU in 2024 to 5.71 t/ha compared to 5.65 t/ha on average for 5 years.

For the fourth time in a month, IKAR analysts lowered their forecasts for the Russian grain harvest in 2024 from 132 to 129.5 million tons, including wheat – from 83.5 to 81.5 million tons due to losses from frost in the central regions and Volgograd region, as well as a shortage of precipitation in Europe, especially in the south. The estimate of grain exports in 2024/25 was lowered from 57 to 55.5 mln tons, including wheat – from 45 to 44 mln tons.

The UGA experts lowered the forecast of grain and oilseeds production in Ukraine in 2024 by 1.5 mln tonnes to 74.6 mln tonnes (82.8 mln tonnes in 2023), including wheat by 0.9 mln tonnes to 19.1 mln tonnes (23.1 mln tonnes in 2023). Accordingly, grain exports will decrease from 53.2 mln tonnes to 43.5 mln tonnes, including wheat – from 17.5 mln tonnes to 13 mln tonnes.

Export purchase prices in Ukraine continue to grow following the dollar and have already reached 200-205 $/t or 9200-9400 UAH/t for milling wheat and 190-192 $/t or 8500-8600 UAH/t for feed wheat with delivery to the Black Sea ports.

Forecasted for the coming days of precipitation in Ukraine and in the South-West of Russia will improve the potential of the crop, which will stop the growth of prices.

Tags: wheat, EU, prices, France