Wheat prices almost recovered after Friday's drop

The wheat market remains highly volatile, and if wheat prices fell by 5-7.7% on Friday amid the signing of an agreement on unblocking Ukrainian ports, this week they almost recovered due to constant shelling of Odesa and Mykolaiv.

First, on July 23, Russia fired at the port of Odessa, and yesterday it hit 13 missiles at its resort suburb - Zatoka, as a result of which 3 residential buildings were destroyed and 15 recreation centers were damaged.

Ukraine continues to work on the organization of grain corridors, but more and more traders doubt that the terminals will work in the conditions of constant shelling, which Russia is trying to block the export of Ukrainian agricultural products.

Yesterday, wheat quotations on world exchanges rose:

• by 4.4% or $12.4/t to $295.3/t – September futures for soft winter SRW wheat in Chicago,
• by 4.4% or $13.69/t to $322.2/t - September HRW hard winter wheat futures in Kansas City,
• by 5% or $16.44/t to $341.3/t - September HRS durum wheat futures in Minneapolis,
• by 0.8% or $2.75/t to $360.5/t - August futures for Black Sea wheat in Chicago,
• by 3.8% or €12.75/t to €344.5/t or $349.5/t - September wheat futures on Paris Euronext.

USDA experts in Buenos Aires lowered the forecast for wheat exports from Argentina in FY 2022/2023 compared to USDA's July estimate by 1.15 million tons to 12.35 million tons, while this season it reached 16.5 million tons. exports due to a reduction in production to 19.5 million tons (according to the July USDA report) due to dry weather.

According to Crop Progress, as of July 24 in the U.S., winter wheat was harvested on 77% of the area (82% last year), and the number of spring wheat crops in good or excellent condition decreased for the week by 3% to 68%, compared to a year ago. only 9%.

In Ukraine, farmers are holding back sales of new crop wheat pending the unblocking of Black Sea ports, as demand prices at Danube ports remain at a low level of $160-200/t. After the increase in the official dollar exchange rate from UAH 29.25 to UAH 36.56/$, purchase prices in the ports rose to UAH 6,500-7,000/t for food wheat and 5,800-6,000 for fodder wheat. Following this, processors raised prices from UAH 4,500-5,000/t to UAH 5,000-5,500/t with delivery to the mill.

If it is possible to remove ships with grain from the ports, then the small terminals of Chornomorsk and Odesa will start receiving wheat, which will immediately increase demand prices. Taking into account insurance and freight costs in the range of $30-50/t, traders will be able to offer $200-220/t for wheat, which is much higher than the price in the Danube ports.