Raising wheat production forecasts in Ukraine and Russia increases pressure on prices

More and more analysts are raising their forecasts for wheat production in Ukraine and Russia due to favorable weather conditions, which increases pressure on the prices of both Black Sea, European and American wheat.

SovEcon experts raised the forecast of wheat production for Russia by 2.2 million tons to 84.6 million tons and for Ukraine – by 300 thousand tons to 29.2 million tons. although some analysts believe that Ukraine will be able to harvest more than 30 million tons of wheat.

At the same time, in the June IGC Report, the forecast for global wheat production in 2021/22 MG was reduced by 1 million tons to 789 million tons, which is still 16 million tons higher than the current season.

The Buenos Aires BAGE exchange increased its forecast for the wheat harvest in Argentina in 2021/22 MG to 19.15 million tons compared to 17 million tons in 2020/21 MG.

Black Sea wheat futures in Chicago fell yesterday:

• July-by 1 1.75 / ton to 2 249 / ton,
• December-by 3 3.25/ton to.256.75 / ton.

Supply prices for Black Sea wheat remain at 2 245-255/ton FOB, but demand prices do not exceed F 240/ton FOB, so the pressure on prices will increase as the harvest progresses.

In Russia, wheat reserves of the old crop as of June 1 increased by 74% compared to last year to the largest 4.8 million tons in the last 10 years.

American wheat also fell yesterday, with the exception of spring wheat, whose prices are rising on forecasts of a new heat wave in the northern plains of the United States in the next 7 days.

Data on wheat export sales from the United States could not support quotes, which for the week increased by 30% to 374.1 thousand tons, which is 38% lower than the corresponding indicator last year. The total volume of export sales in my 2021/22 amounted to 6.1 million tons, which is 10% lower than last year's pace. The actual export of wheat from the United States for the week doubled to 590.8 thousand tons, and in general in 2021/22 MG amounted to 1 million tons, which is 23% lower than the corresponding indicator last year.

July US futures fell yesterday:

• by 3 3.67 / ton to Чикаго 239.2/ton for soft winter SRW wheat in Chicago,
• by 2 2.2/ton to.222.7 / ton for hard winter HRW wheat in Kansas City.

Hard spring HRS wheat rose in price by 1 1.65/ton to.297.3/ton in Minneapolis.

According to AgriCensus, China purchased 250 thousand tons of Australian high – protein wheat for delivery in August-September at a price of F 285-300/ton FOB. From December to April, Australia, despite political disputes, exported 1.3 million tons of wheat to China, so the latter reduced purchases of French wheat.

• September matif flour wheat futures fell by €2.25/ton to €204.5/ton or € 244.25 / ton, which increased pressure on Black Sea wheat prices.

An increase in wheat supply in the new season will increase competition between sellers, so they will be forced to lower prices.