Dry weather in the US contributes to speculative growth in wheat prices

Exchange prices for wheat rose slightly amid news of dry weather in the regions where winter wheat is grown in the United States and active purchases of wheat by traders before the long weekend. At the same time, prices for Black Sea wheat remain under pressure from good weather and forecasts of new precipitation in the form of snow next week.

The Russian agency SovEcon raised its forecast for the country's wheat harvest in 2022 from 80.7 to 81.3 million tons (75.5-77 million tons in 2021) due to favorable weather in the southern regions, where winter wheat is mainly grown, and crops are in better-than-average condition due to heavy autumn rains. According to Rosmeteocenter, only 3% of crops are in poor condition now, while a year ago there were 22% of them, and on average for 5 years – 8.4%. The good condition of crops compensates for the current reduction in the area of winter grain sowing by 900 thousand hectares to 18.4 million hectares.

For Ukraine, SovEcon experts raised the forecast for the wheat harvest in 2022 by 2 million tons to 29.1 million tons (32.5 million tons in 2021).

• March futures for Black Sea wheat on the Chicago Stock Exchange yesterday rose by 2 2.75/ton to 3 337.5/ton, and July futures for new crop wheat – by 2 2.5/ton to.304/ton.

Prices were supported by a new tender in Turkey, where the state agency TMO purchased 320 thousand tons of wheat with 12.5% protein at a price of 3 354.9- - 361.9/T C&F and with 13.5% protein at a price of.362/T C&F for delivery in February. Compared to the tender of November 25, purchase prices decreased by 2 24-36/ton, but against the background of the fall in the Turkish lira exchange rate, the results of the tender supported the prices of Black Sea wheat.

On the stock exchanges in Chicago and Kansas, there is a sharp speculative increase in prices for winter wheat by 2.7-3.5%, while spring wheat rose slightly amid the lack of precipitation and possible frosts, which can damage crops not covered with snow. In the next 7-10 days in Kansas expect warm weather +2.+12 degrees without significant precipitation.

March futures on US stock exchanges rose:

• by 2.7% or 7 7.81 / ton to Чикаго 293.6/ton for soft winter SRW wheat in Chicago,
• by 3.5% or 1 10.38/ton to 3 309.2 / ton for hard winter HRW wheat in Kansas City,
• by 2 2.11/ton to.376.8 / ton for hard spring HRS wheat in Minneapolis.

European wheat continues to rise in price after American wheat amid a decline in the euro exchange rate to 1 1,127/€.

• March European wheat futures on Paris ' Euronext rose by €5.25/ton to €285/ton or.321.4 / ton.

Abares has raised its forecast for the Australian wheat harvest in my 2021/22 to 34.4 million tons due to an increase in production in the western regions from 11.5 to 11.7 million tons, which will increase pressure on prices in January, when the updated global balance sheets are released.