Wheat quotations fell by another 4-6%, and wheat in the USA fell to pre-war levels

On world markets, pessimistic sentiments are intensifying due to expectations of economic recession and a drop in demand, so all product groups are rapidly falling in price. Following the drop in oil prices by 8-10%, wheat quotations dropped by another 4-6% yesterday.

Statistics Canada’s StatsCan forecasts that wheat acreage will increase by 8.7% from last year to 25.395 million acres, thanks to a 10.5% increase in spring wheat acreage.

According to NASS USDA data, in the USA as of July 3, against the background of hot weather, winter wheat has been threshed on 54% of the area (48% on average for 5 years). During the week, the number of winter wheat crops in good or excellent condition increased by 1% to 31% (47% last year), and spring wheat by 7% to 66% (16% last year) thanks to recent rains.

During the week of June 24-30, wheat exports from the USA tripled to 111.8 thousand tons, and in June totaled 1.45 million tons, while in June 2021 it reached 1.908 million tons.

Yesterday, wheat futures fell to the levels that preceded the start of Russia’s war against Ukraine:

• by 5% or $14.33/t to $296.5/t – July futures for soft winter SRW wheat in Chicago (-36.3% for the month),
• by 6.4% or $18.92/t to $316.7/t – July HRW hard winter wheat futures in Kansas City (-36.8% for the month),
• by 6.9% or $21.3/t to $327/t – July futures for hard spring HRS-wheat in Minneapolis (-38.2%).
• by 2.5% or $9.25/t to $364.25/t – August futures for Black Sea wheat in Chicago (-12%).
• by 2.4% or 11.5 €/t to 331.75 €/t or $340.6/t – September wheat futures on the Paris Euronext (-19.8%).

The markets are still focusing on speculative news about the recession, not reacting to another decrease in global production forecasts.

The European Commission reduced the forecast of soft wheat production in the EU in the 2022/23 FY by 5.3 million tons to 125 million tons compared to June estimates, which will be inferior to the 130.1 million tons collected in the 2021/22 FY. Compared to the previous season, wheat exports are expected to increase by 8 million tons to 38 million tons, and ending stocks are expected to decrease by 4 million tons to 13.2 million tons.

In Ukraine, the first data on wheat harvesting indicate a significant decrease in yield compared to last year. This will lead to lower crop forecasts, especially given the continuation of hostilities and cases of grain losses due to field fires.

Tags: Ukraine, Russia, prices, Canada, wheat, USA