Wheat prices rose by 2.3-3.9%, but further growth will be limited by forecasts of increased harvest

Global wheat prices are forecast to rise amid heightened tensions in the Black Sea, but traders will pay more attention to crop forecasts this week in anticipation of an updated balance sheet from the USDA.

Yesterday, wheat quotations increased by 2.3-3.9%, but overall, prices decreased during the week.

September futures rose in price yesterday:

• by 3.9% to $241.6/t – for soft winter SRW wheat in Chicago (-1.1% for the week),
• by 2.3% to $282.8/t – for HRW hard winter wheat in Kansas City (-5.5%).
• by 0.2% to $302.9/t – for hard spring HRS-wheat in Minneapolis (-3.7%).
• by 0.4% to $244.5/t – for Black Sea wheat in Chicago (+1.8%).
• by 2.5% to €241.5/t or $265/t – for wheat on the Paris Euronext (+0.5%).

In the USA, as of August 6, 2023, winter wheat was harvested on 87% of the area (88% on average), and spring wheat on 11% of the area (14% on average). The number of spring wheat crops in good or excellent condition for the week fell 1% to 41% (64% last year), although analysts had expected improved crop condition on the back of last week’s abundant rainfall.

Exports of wheat from the USA for the week of July 28 – August 3 almost halved to 275,000 tons, and the total for the season amounted to 3.016 million tons, which is 16% lower than last year’s pace.

According to the European Commission, the EU exported 2.35 million tons of wheat in the first month of 2023/24, which is 13% less than last year’s pace.

France increased the forecast of the yield of soft wheat in 2023 from 7.34 to 7.47 t/ha compared to July estimates, as a result of which it increased the production forecast from 35 to 35.59 million tons, which is by 5.6% will exceed last year’s figure.

In the south-western regions of the Russian Federation, harvesting of winter wheat has been completed, and the IKAR agency has raised the forecast for the grain harvest in the Russian Federation in 2023 to 137 million tons, wheat in particular – by 1.5 million tons to 88 million tons. The wheat export forecast has been increased from 46 to 47 .5 million tons.

In Ukraine, against the backdrop of high yields, the share of food wheat decreased from the traditional 60-70% to 20-30%, which led to a collapse in feed grain prices and an increase in food demand. Demand prices for grade 2.3 wheat rose to UAH 7,100-7,400/t with delivery to Danube ports, while feed wheat prices fell from UAH 6,700 to UAH 6,300-6,400/t.

In Friday’s USDA wheat balance, the harvest forecast for the EU may be lowered, but increased for Ukraine and the Russian Federation, although in general significant changes in estimates of world production and stocks are not expected.