Wheat quotes are rising despite an increase in production forecasts from the IGC
Speculative growth in wheat prices continues on world exchanges, caused by fears about the closure of “grain corridors” from the ports of Ukraine and a reduction in wheat supplies from the Black Sea region. The market even ignored the predicted IGC increase in wheat production in the world and the Russian Federation, as well as the low rate of export sales in the USA.
In the September report, IGC experts increased the forecast of world wheat production in 2022/23 MR by 14 million tons to 792 million tons, which will exceed last year’s harvest by 10 million tons. In particular, for Russia, the production forecast was increased by 5.8 million tons to 93.4 million tons, although the local agency Rusagrotrans increased its forecast to 100.1 million tons against the background of high wheat yields in eastern Siberia.
At the same time, IGC experts left the forecast of wheat exports from the Russian Federation at the level of 36.5 million tons in 2022/23, so the estimate of final stocks was increased to 22.5 million tons, which will double the figure for 2021/22. At the same time, the forecast of global final reserves was increased by 11 million tons to 286 million tons.
The RGE exchange lowered its forecast for wheat production in Argentina in 2022/23 from 17.7 million tonnes to 16.5 million tonnes, amid a reduction in planted areas due to severe drought, while Brazil, the main buyer of Argentine wheat, plans to sharply increase production in the current season .
The Brazilian agency Safras&Mercado increased the forecast of wheat production in the country in 2022 from 10.5 to 10.935 million tons, while in 2021 it was 7.7 million tons, and in 2020 – 6.5 million tons.
According to the MSG of the USA, export sales of wheat for the week of September 9-15 decreased by 16% to 183.5 thousand tons, and in general in the season reached 10.4 million tons, which is 4% lower than last year’s pace.
Since Tuesday, wheat prices have risen by 6-10%, in particular yesterday:
- by 1.1% or $3.67/t to $337.1/t – December futures for soft winter SRW wheat in Chicago,
- by 1.3% or $4.6/t to $359.9/t – December futures for HRW hard winter wheat in Kansas City,
- by 1.4% or $4.96/t to $359.3/t – December futures for HRS durum wheat in Minneapolis,
- by 0.5% or $1.75/t to $321.25/t – October Black Sea wheat futures in Chicago,
- by 0.7% or €2.25/t to €349.25/t or $343.06/t – December wheat futures on Paris Euronext.
The intentions of the Russian authorities to mobilize about 1 million people will prolong the war even more. However, Russia will still lose, as its troops lack motivation, and Ukrainians choose their will and independence, receiving support from Western countries.
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