Further escalation of the war on the part of the Russian Federation increases wheat prices

Russia is once again increasing the pressure on Ukraine, and after the mobilization of 300,000 to 1 million Russians into the army, yesterday it announced the results of the so-called "referendums" held in the occupied Ukrainian territories. According to their data, almost 90% of those who voted were in favor of joining the Russian Federation, but in Kherson region, home to more than 2 million residents, the number of ballots in the "referendum" was only 30,000, or 1.5%. Already at the beginning of October, Putin plans to announce the annexation of the captured territories, which may affect the course of hostilities and increase the risk of using nuclear weapons.

This situation led to another increase in stock exchange prices for wheat, and the weather became an additional supporting factor, as long rains in Ukraine and the Russian Federation delayed the sowing of winter wheat.

Last week, world wheat prices rose by 5-8%, fell by 5-6% on Monday, and rose again by 5-6% on Tuesday and Wednesday, in particular:

• by 5.2% or $16.6/t to $331.9/t – December futures for soft winter SRW wheat in Chicago,
• by 5% or $17.1/t to $358.6/t - December HRW hard winter wheat futures in Kansas City,
• by 4.4% or $15.1/t to $357.3/t - December futures for HRS durum wheat in Minneapolis,
• by 1.7% or $5.25/t to $321.25/t - October Black Sea wheat futures in Chicago,
• by 2.8% or €9.5/t to €353.75/t or $342.78/t - December wheat futures on Paris Euronext.

In the current season, as of September 26, the European Union exported 8.8 million tons of wheat, in particular, France - 3.4 million tons, Romania - 1.4 million tons, Germany - 0.9 million tons. Last year, on this date, 8.7 million tons, that is, the rate of export almost did not change. According to USDA estimates, EU countries will export 33.5 million tons of wheat in 2022/23, which will be 1.6 million tons higher than the previous season and 3.3 million tons higher than the 5-year average.

In the western United States, drought persists in some places, but in anticipation of rains, farmers are actively sowing wheat. NOAA estimates that 9 to 15 inches of rain would be needed to eliminate the drought. The long-awaited rains are coming in the EU, but it is not yet clear whether they will be able to correct the effects of a dry summer. In the Black Sea region, excessive precipitation is delaying the sowing of winter crops, and drought continues to prevail in Argentina.

Only 16% of the planned areas are sown with winter wheat in Ukraine, and 47% or 9 million hectares in the Russian Federation.