U.S. wheat prices rise 2% after long decline

Global wheat prices have been depressed for a long time under pressure from weak demand and favorable weather for winter wheat crops in the Northern Hemisphere, as well as rainfall in India and Australia. But yesterday, the stock market saw a speculative rise in quotations, as traders do not expect further price declines, especially given the heat in Argentina.

According to the US MSG, the number of winter wheat crops in good or excellent condition increased compared to the end of December in Kansas by 11% to 54% (21% last year), Nebraska by 21% to 69% (22%), North Dakota by 10 % to 60% (41%), Illinois by 20% to 75% (69%), but it decreased in Oklahoma by 4% to 63% (17%) and Texas by 7% to 42% (14%).

According to the USDA, wheat exports from the United States during January 19-25 decreased by 19% compared to the previous week to 264.7 thousand tons, and in total in the season reached 10.99 million tons, which is 20% less than exported during this period last year 13.2 million tons.

Yesterday, March wheat futures rose:

• by 2% to $222.5/t - for soft winter SRW wheat in Chicago (+1.5% for the week),
• by 2% to $231.8/t - for hard winter HRW wheat in Kansas City (+2.2%).
• by 0.9% to $257.1/t - for hard spring HRS-wheat in Minneapolis (+0.1%).
• by 0% to €213.75/t or $232.6/t - for wheat on the Paris Euronext (-1.8%).

European wheat prices continue to decline and have already lost 12% since the start of the season.

The export of wheat from the EU increased to 453,000 tons during the week, and in total in the season as of January 28, 2024, it amounted to 18.24 million tons, which is 5% lower than last year's pace. Against the backdrop of falling prices, European traders are increasing export volumes, successfully competing with Russian wheat.

The European Commission raised the forecast for the production of soft wheat in the EU in 2023/24 FY by 0.2 to 125.9 million tons (125.8 million tons in 2022/23 FY), its import by 0.5 to 7 (9, 6) million tons and final stocks - by 0.7 to 19.1 (19.4) million tons, but left the export forecast unchanged at the level of 31 (32.7) million tons.

The Philippines' tender purchase of 96,000 tonnes of Australian feed wheat for delivery in April-May at a price of $280/t C&F will also support the market.

In Ukraine this week, purchase prices for fodder wheat with delivery to Black Sea ports remained at the level of $150-157/t or UAH 6,300-6,450/t due to a reduction in offers from producers. At the same time, processors increased the demand for high-quality food wheat with 12.5% protein and its prices to 7,000-7,500 hryvnias/t with delivery to the factory, which is significantly higher than the 7,400-7,700 hryvnias/t with delivery to ports offered by exporters.

Lower corn export prices will increase pressure on the price of feed wheat, but it will be supported by a shortage of supply of wheat, especially of food grade.