The drop in world wheat prices limits price growth in Ukraine

An increase in the supply of new crop wheat, especially cheap Ukrainian wheat, increases the pressure on global quotations, and low demand from importers leads to "bearish" trends in the markets.

Traders who find it difficult to sell European and American wheat are pessimistic due to record production in the Russian Federation and forecasts of the second largest wheat harvest in Australia.

As of September 2, 88.2 million tons of wheat were harvested from 22.2 million hectares or 75.4% of the area in the Russian Federation with a yield of 3.97 t/ha, while last year at this time 66.4 million tons were harvested with a yield of 2 .99 t/ha. In the eastern regions, the weather favors the harvesting of spring wheat, which has a high yield, so the total production may exceed 95 million tons compared to 76 million tons last year.

In August, the USDA raised the forecast for the wheat harvest in Australia from 30 to 33 million tons, and ABARES experts estimate it at 32.2 million tons, which will be slightly inferior to last year's record.

The number of ships with grain sent from the Black Sea ports of Ukraine is increasing, so more and more companies are resuming purchases, which contributes to the increase in prices. Demand prices for food wheat with delivery to the ports of Odesa and Chornomorsk rose to 7,600-7,800 UAH/t or $190-210/t, while feed wheat prices remained at the level of 6,400-6,800 UAH/t or $150-170/t .

Demand prices for food wheat with delivery on DAP - Lithuania, Romania decreased to $285-310/t, which supports the demand for it at a high level.

Yesterday, wheat quotations on world exchanges rose:

• by 0.7% or $2.2/t to $300.2/t – December futures for soft winter SRW wheat in Chicago,
• by 0.5% or $1.56/t to $324.1/t - December HRW hard winter wheat futures in Kansas City.

Remained at the level of $326.9/t - December futures for hard spring HRS-wheat in Minneapolis.

As of September 4 in the US, according to the weekly Crop Progress report, spring wheat has been harvested in 71% of the area, which is 12% less than the 5-year average (83%).

According to the US MSG, in the period from August 26 to September 1, wheat exports decreased by 32% compared to the previous week to 477.7 thousand tons, and the total export of the 2022/23 season is 1 million tons lower than last year's pace.

On forecasts of an increase in the harvest and export of wheat from the Russian Federation, the October futures for Black Sea wheat in Chicago yesterday fell by another 0.5% to $311.5/t, having lost 9.5% in 2 weeks.

September wheat futures on Paris Euronext fell 3% to €314.25/t or $310.9/t from Monday, losing 7% for the week on weak demand, and were not supported even by the euro's fall against the dollar to the level of 0.989 $/€.

The USDA's September balance sheet for wheat, which will be released on Monday, is likely to be "bearish" as it will once again raise the Russian harvest forecast and global ending stocks.