Wheat quotes fell by 1.1-4% on the news about the continuation of the grain corridor

After growing at the beginning of the week by 2-4%, wheat quotations on world exchanges yesterday fell by 1.1-4% on the news of the extension of the grain corridor for another 60 days. Although this factor is mostly speculative, since Ukraine has almost exhausted its wheat export potential this season.

The results of the crop tour in Kansas at the end of the week may lead to another jump in prices, as the inspection confirms the critical condition of the crops. Already, prices for hard winter HRW wheat in Chicago are 41% or almost $100/t higher than for soft winter SRW wheat.

After two days of surveys of fields in Kansas, the main producer of wheat in the USA, the yield is estimated at the lowest since 2003, 2 t/ha, while last year it was 2.7 t/ha, and the average for 5 years was 3.1 t/ha. In northern and central Kansas, the wheat crop suffered more than expected losses from the winter cold, so some of the crop will be harvested for hay. In some fields, the ear is located so low that the harvesters will not be able to thresh it.

Ukraine has already exported 15 million tons of wheat, which corresponds to the USDA forecast, but by the end of the season it will be able to ship another 1-1.5 million tons, if the Russian Federation does not block inspections of vessels for loading in Black Sea ports.

During the week, the Russian Federation reduced wheat exports from ports from 1.06 to 0.68 million tons, which is the lowest figure since February. Because of this, analysts lowered the forecast for wheat exports in May to 3.8 million tons (4.3 million tons in April), which will significantly exceed the long-term average figure for May – 1.5 million tons. SovEkon experts estimate wheat exports from the Russian Federation in 2022/23 MY in 44.4 million tons.

July wheat futures fell yesterday:

• by 3.6% to $229.8/t – for soft winter SRW wheat in Chicago,
• by 1.1% to $325.4/t – for hard winter HRW wheat in Kansas City,
• by 2.2% to $315.9/t – for hard spring HRS-wheat in Minneapolis,
• by 0.7% to $262.5/t – for Black Sea wheat in Chicago,
• by 4% to €225.5/t or $245/t – September wheat futures on the Paris Euronext.

According to the forecast of the Grain Exchange of Buenos Aires, thanks to the increase in the area of sowing and productivity, the production of wheat in Argentina will grow by 40% to 18 million tons in 2023/24.

In the next 7-10 days, warm weather without precipitation is expected in the main wheat-growing regions of the United States, which will continue to worsen the potential of the harvest.

Tags: Ukraine, prices, wheat, USA, Argentina