Wheat prices decline after speculative growth

After a rapid increase in wheat prices that occurred against the background of a "bearish" USDA report, where estimates of sowing areas and quarterly wheat stocks were lower than traders expected, yesterday quotes declined under the pressure of reality, namely data on export sales and exports for the week.

Export sales of US wheat of the 2021 harvest for the week fell by 40% to 226 thousand tons, which is lower than analysts ' expectations, and a total of 6.4 million tons of wheat have been sold since June 1, which is 12% behind last season's figures.

Wheat exports from the United States for the week decreased by 77% to 136.1 thousand tons, and the total volume of wheat exports since the beginning of the season is 1.1 million tons. tons, which is 39% less than last year.

July quotes of American wheat declined:

• soft wheat SRW in Chicago by 4 4.78 to 2 241.95 / ton
• HRW durum wheat in Kansas City by 6 6.89 to 2 232.03 / ton
• hrs durum wheat in Minneapolis increased by 3 3.21 to.315.99/ton.

In the area of the American plains, hot weather remains without precipitation, so the assessment of the state of spring wheat is likely to worsen again.

Lower prices for Black Sea wheat have increased the number of procurement tenders this week:

• Turkish agency TMO purchased about 395 thousand tons of food wheat at a price of about 2 262.6 / ton CFR for delivery in July and August;
• Tunisian agency (ODC) 100,000 tons of soft food wheat at a price of about C 281.5/ton CFR, which is 1 16.3/ton cheaper than at the previous tender;
• The Iranian GTC agency has about 150 thousand tons of food wheat delivered in August-September.

After the publication of USDA reports, European wheat prices rose to a 3-week high on Tuesday, but on Wednesday and Thursday, September wheat prices on the Paris matif exchange remained at a high level of 209.00 €/ton or 2 247.81/ton.

Black Sea wheat futures in Chicago rose by 4 4-5 after the release of reports, but fell yesterday:

• July-by 5 5 / ton to 2 248.5 / ton;
• December-by 6 6.5 / ton to.257.5 / ton.

The acceleration of wheat harvesting in Russia and Ukraine will continue to increase pressure on prices in the physical market, where supply prices have already fallen to 2 240-250/ton FOB, but the lack of buyers continues to increase pressure on prices whose demand does not exceed F 235/ton FOB.

The increase in freight costs in all directions also puts additional pressure on purchase prices.

The cost of freight from Black Sea ports to Asian ports increased from 4 40-45 to 6 60-70 / ton.

Wheat exports from Australia remain at a high level and another record of about 2.7 million tons was reached in May, which continues to reduce demand for Black Sea wheat from Asian buyers.

Purchase prices for food wheat in Ukraine decreased to the level of 2 215-220/ton or 6600-6800 UAH/ton for delivery to the port, while the discount on feed wheat continues to increase to the level of about 1 10/ton.