Wheat futures on Euronext rose to a 14-month high, supporting prices in Ukraine

On Monday, the stock exchanges in the USA were closed for the celebration of Memorial Day, while on the stock exchange in Paris, the prices of wheat continued to grow rapidly on the forecasts of a decrease in the harvest in Ukraine, African countries and the Russian Federation.

According to the MARS monitoring data of May 27, the drought in western North Africa, especially in Morocco and northwestern areas of Algeria, will lead to a sharp decrease in wheat yields, which will increase the need for imports.

September wheat futures on the Paris Euronext yesterday rose almost 3% to a 14-month high of €269/t or $292.6/t (+4.9% for the week, +14.3% for the month).

Traders are worried about forecasts of a decrease in wheat production in Ukraine and the Russian Federation, so they have not yet reacted to the MARS experts' increase in the estimate of wheat yield in the EU in 2024 to 5.71 t/ha compared to 5.65 t/ha on average over 5 years.

For the fourth time in a month, IKAR analysts lowered their forecasts for the grain harvest in the Russian Federation in 2024, now from 132 to 129.5 million tons, in particular wheat - from 83.5 to 81.5 million tons due to frost losses in the central regions and the Volgograd region, and as well as the lack of precipitation in the European territory, especially in the south. The estimate of grain exports in 2024/25 has been reduced from 57 to 55.5 million tons, in particular wheat - from 45 to 44 million tons.

UZA experts lowered the forecast for the production of grain and oilseed crops in Ukraine in 2024 by 1.5 million tons to 74.6 million tons (82.8 million tons in 2023), in particular wheat – by 0.9 to 19 .1 million tons (23.1 million tons in 2023). Accordingly, grain exports will decrease compared to the current season from 53.2 to 43.5 million tons, in particular wheat - from 17.5 to 13 million tons.

Export purchase prices in Ukraine continue to grow following the dollar exchange rate and have already reached $200-205/t or UAH 9,200-9,400/t for food wheat and $190-192/t or UAH 8,500-8,600/t for fodder with delivery to ports Black Sea.

Precipitation predicted for the coming days in Ukraine and the south-west of the Russian Federation will improve the potential of the harvest, which will stop the rise in prices.