After a long fall, wheat quotes rose by 4-5.5% on forecasts of a reduced harvest

After a long decline yesterday, wheat prices on world exchanges rose by 4-5.5%, as traders took into account forecasts of lower harvests in North Africa and Europe due to drought.

In one month, wheat prices in Chicago fell by 37% and reached pre-war levels on July 6, although exports from Ukraine remain blocked, and the forecast for wheat production in the country in 2022/23 MR is 20-21 million tons, which is 50% less than last year.

The Ukrainian Grain Association estimates the wheat harvest in Ukraine in 2022 at 20.8 million tons, and exports at 10 million tons, while the USDA in June predicted them at 21.5 and 10 million tons, respectively. Agritel experts estimate production at 21.8 million tons.

The increase in quotations is due to a decrease in wheat harvest forecasts in the EU countries, which remain the main suppliers of wheat on the world market, since the purchase of grain from Russia may be associated with sanctions or payment difficulties.

According to the European Commission, in 2021/22, compared to the previous season, the EU reduced wheat exports by 200,000 tons to 27.5 million tons, although the initial forecast was 39 million tons. Algeria, Egypt and Nigeria became the main buyers of European wheat. The reduction of the harvest forecast to 125 million tons supports the quotation.

According to the forecast of the MSG of Morocco, in 2022/23 MR, grain production in the country will decrease by 69% compared to the previous season to 3.2 million tons, in particular wheat - to 2.5 million tons, including soft - to 1, 8 million tons, solid - up to 753 thousand tons.

Yesterday, wheat futures rose in price:

• by 4% or $11.76/t to $307.4/t - September futures for soft winter SRW wheat in Chicago,
• by 4.4% or $13.8704/t to $326.7/t - September HRW hard winter wheat futures in Kansas City,
• by 5.5% or $17.8/t to $343.4/t - September HRS durum wheat futures in Minneapolis,
• by 0.9% or $3.25/t to $363.75/t – August Black Sea wheat futures in Chicago,
• by 4% or €13.25/t to €338.75/t or $344.1/t - September wheat futures on Paris Euronext.

Indian authorities have been restricting wheat flour exports since July 12 due to a sharp increase in demand for it from neighboring countries following the ban on wheat exports from India.

Wheat export licensing was canceled in Ukraine, which intensified purchases of old and new crop grain by traders. However, following the world markets, demand prices decreased to $220-230/t SRT Reni / Izmail or DAP - Poland and $270-280/t DAP - Romanian ports.

The first data on harvesting show the yield in the central regions at the level of 3-4 t/ha, but in the south it is much lower than last year. Precipitation forecasted for the next few days may worsen the quality of wheat, but will contribute to the development of sunflower and corn crops.