Active harvesting puts pressure on wheat prices

On Friday, wheat prices continued to fall on world exchanges under the pressure of better harvest rates than last year and on expectations of recovery of exports from Ukrainian seaports.

Traders hope that on July 20-21, Ukraine and Russia, with the assistance of Turkey and the UN, will sign the announced agreement, which will allow unblocking the export of grain from the Black Sea ports. But the missile attacks on Mykolaiv, Odesa and other cities have once again confirmed that Russia aims to continue to destroy the infrastructure and economy of Ukraine.

In anticipation of an increase in supply, traders actively sold wheat contracts last week, which reduced speculative demand and led to a drop in quotations for the week by 9.4-14.8%.

On Friday, stock quotes fell:

• by 2.5% or $6.89/t to $285.4/t – September futures for soft winter SRW wheat in Chicago (-14.8% for the week);
• by 1.36% or $4.13/t to $307.7/t - September futures for HRW hard winter wheat in Kansas City (-12.9%).
• by 0.3% or 1.1 $/t to 333.2 $/t - September futures for HRS durum wheat in Minneapolis (-9.4%).
• by 0.7% or $2.5/t to $356.5/t - August futures for Black Sea wheat in Chicago (-3.5%).
• by 5.2% or €17.25/t to €325.5/t or $362.3/t - September wheat futures on Paris Euronext (-9.7%).

According to FranceAgriMer, as of July 11, wheat in France has been threshed on 50% of the area, which is significantly higher than last year's 3%. Durum wheat was harvested on 82% of the area compared to 37% last year. 64% of unharvested soft wheat crops are in good or excellent condition (63% a week ago and 76% a year ago), and 56% of durum crops (56% a week ago and 66% last year).

Out of the forecasted 81-88 million tons, Russia has already threshed 15.5 million tons of wheat, which is 46% higher than last year's rate.

In Ukraine, as of July 15, 1.7 million tons of wheat were threshed from 588.3 thousand hectares with a yield of 2.88 tons/ha compared to 4.11 tons/ha last year. The Ministry of Agrarian Policy lowered the wheat harvest forecast in Ukraine to 18-19 million tons.

According to the State Customs Service, in 2022/23 FY Ukraine exported 119,000 tons of wheat as of July 15, while last year this figure was 248,000 tons. But after the cancellation of wheat export licenses, its pace accelerated significantly.

Demand prices for food wheat remain at a low level of UAH 3,500-4,500/t at elevators and UAH 5,000-5,500/t in small Danube ports. Farmers are selling limited batches in anticipation of the unblocking of the Black Sea ports.