Speculative growth in wheat prices continues for three weeks in a row

Speculative growth of wheat prices continues on world exchanges, as traders consider the weather not favorable for crops, although weather conditions are quite good in most exporting countries, and only in some areas there is a deficit of precipitation, which is compensated by low temperatures.

Better-than-last-year planting rates and rainfall forecasts should reduce the impact of speculative factors, but this is likely to be done by USDA experts, who will release their 2024/25 crop forecast later this week.

Wheat quotations for three weeks increased by 12.3-15.4%, in particular yesterday - by 1.5-4.4%, ignoring data on improved crops, high sowing rates and reduced exports to the USA.

July futures for new harvest wheat rose yesterday:

• by 4.2% to $238.4/t - for soft winter SRW-wheat in Chicago (+6.6% for a week, +14% for three weeks),
• by 3.8% to $248.1/t - for hard winter HRW wheat in Kansas City (+3.8%, +15.4%),
• by 1.5% to $266.6/t - for hard spring HRS-wheat in Minneapolis (+2.1%, +12.3%),
• by 4.4% to €245.25/t or $264/t – September wheat futures on the Paris Euronext (+6.6%, +12.8%).

According to the NASS USDA, in the US during April 28 - May 5, the number of winter wheat crops in good or excellent condition increased compared to the previous week by 1% to 50% (29% last year). 47% of the planned areas were sown with spring wheat (21% last year, 31% on average over 5 years).

The export of wheat from the USA for April 26 - May 2 decreased in comparison with the previous week by 36.1% to 321.1 thousand tons, and in general in the season reached 17.26 million tons, which is 6.54% lower than last year's pace.

As a result of dry weather in the Rostov region and the Krasnodar and Stavropol regions, ICAR experts lowered the forecast for wheat production in 2024/25 MR from 93 to 91 million tons, and for exports from 52 to 50.5 million tons, which will correspond to the level of the current season.

In April, the Russian Federation exported 4.65 million tons of wheat (4.55 million tons in April 2023), and in May it can ship another 4.2 million tons, which will almost correspond to the record figure of May 2023 - 4.3 million tons.

During the week, export prices for May deliveries of Russian wheat with a protein content of 12.5% increased by $3.5/t to $215/t FOB, for French - by $22/t to $240/t, German - by $16/t t to $247/t.

In 2023/24 FY (as of May 6), Ukraine exported 16 million tons of wheat, which is 9.6% higher than last year's rate. Another 2 million tons can be shipped by the end of the season.

Against the background of rising world prices, export demand and purchase prices for wheat continue to grow in Ukraine. During the week, prices for fodder wheat rose by 100-200 UAH/t to 7300-7500 UAH/t or $163-166/t, and for food - by 100-200 UAH/t to 7950-8100 UAH/t or 178- $185/t with delivery to Black Sea ports. Prices for new crop wheat are at the same level, so farmers are actively selling stocks amid favorable weather for crops.

In the coming days, the weather is expected to improve in the USA, Europe, Ukraine, and the Russian Federation, which will accelerate the sowing of spring wheat and will have a favorable effect on crops. This will increase the pressure on the quotations of the new harvest, which are now 5-20 $/t higher than the prices of the old harvest.