After a 5-day fall, wheat prices rose on forecasts of heat in the US and the EU

In yesterday's report, the experts of the European Commission expressed concern about the threat of drought on 50% of the territory of the EU in the summer of 2022, which will lead to a significant reduction in the harvest. The heat wave starting this week will be the second in Western Europe this month. Scientists attribute it to the greenhouse effect and global warming, and warn of a possible increase in the area of forest fires that have already destroyed thousands of hectares of forests in France, Greece, Spain and Portugal and led to the death of hundreds of people.

After a long decline at the end of last week, wheat quotes on world exchanges fell to "pre-war" levels, but yesterday rose by 3-4.5%, as follows:

• by 4.6% or $13.23/t to $298.6/t - September futures for soft winter SRW wheat in Chicago,
• by 4.4% or $13.41/t to $321.1/t - September HRW hard winter wheat futures in Kansas City,
• by 3.6% or $11.85/t to $345/t - September futures for hard spring HRS wheat in Minneapolis,
• by 0.6% or $2.25/t to $358.75/t – August Black Sea wheat futures in Chicago,
• by 3% or €9.75/t to €335.25/t or $339.74/t - September wheat futures on Paris Euronext.

In the USA, the harvesting of winter wheat is completed, which has already been threshed on 70% of the area (71% on average over 5 years). The number of crops in good or excellent condition for the week increased by 1% to 71% (11% last year). A sharp rise in oil prices, followed by soybeans and corn, supported the wheat market.

In Russia, the weather contributes to the formation of a good harvest, which activates exports. Since July 1, 1.245 million tons of wheat have been shipped, which is double the 637,000 tons exported during the same period last year. Thus, compared to the previous season, the export of wheat to Iran increased by 2.3 times from 95 to 222 thousand tons, to Egypt by 2.7 times from 41 to 114.6 thousand tons, to Turkey by 95% from 140 to 271 thousand tons. In 2021/22 MR, the main buyers of Russian wheat were Turkey (9.013 million tons) and Iran (7.888 million tons), which bypass sanctions. Therefore, Turkey is interested in unblocking Ukrainian ports in exchange for the lifting of sanctions on Russian grain, which it processes and sells further to eastern countries. According to the Kyiv School of Economics, the export of food from Crimea increased 50 times after the military aggression, which indicates the supply of grain stolen from Ukraine.

In Ukraine, demand prices for food wheat remain at a low level of 3,500-4,500 UAH/t at elevators and 5,000-5,500 UAH/t in small ports on the Danube, but demand is growing from processors who offer 4,000-5,000 UAH/t with delivery to mill. Farmers hold back sales, watching negotiations to unblock Black Sea ports. However, the recent rocket attacks on Mykolaiv and Odesa confirm that it is unlikely that anything will be agreed upon with Russia.

In June, China reduced wheat imports by 31.3% to 520,000 tons, and in the first half of this year, it purchased 4.94 million tons of wheat, which is 7.8% less than last year.

The tenders held by the Egyptian GASC and the Trade Corporation of Pakistan (buying 300,000 tons of wheat) will show the market the mood of importers at the beginning of the new season.