Wheat quotations collapsed by 4.5-7% after the return of the Russian Federation to the grain agreement

After Russia's announced withdrawal from the grain agreement, Turkey, Ukraine and the UN agreed on the further movement of ships from Black Sea ports. Realizing that there will be no persuasion, the Kremlin immediately announced a return to the grain agreement, but noted that the decision to extend it after November 19 will be considered separately.

The step for such a statement was Putin's tough conversation with Erdogan, who emphasized the need for the immediate end of the special operation, the withdrawal of Russian troops from Ukraine, and Russia's fulfillment of the terms of the grain agreement signed with Turkey and the UN. In addition, Moscow believes that the resumption of participation in the grain initiative will allow bargaining for a decision to extend the agreement after November 19.

On this news, wheat quotes on global exchanges fell 4.5-7% yesterday, losing Monday's speculative gains, namely:

• by 7.1% or $20.76/t to $310.9/t - December futures for soft winter SRW wheat in Chicago,
• by 5.5% or $18.28/t to $345.5/t - December HRW hard winter wheat futures in Kansas City,
• by 4.5% or $14.88/t to $348.8/t - December futures for HRS durum wheat in Minneapolis,
• by 1.1% or $3.75/t to $317.25/t November Black Sea wheat futures in Chicago,
• by 4.8% or 16.5 €/t to 341.25 €/t or $340.95/t - December wheat futures on Paris Euronext.

According to the Ministry of Agriculture, in 2022/23 MR, as of November 2, Ukraine exported 5.1 million tons of wheat (out of USDA's forecast of 11 million tons), which is 60% lower than last year's pace.

At the same time, in October, Russia intensified grain exports. According to the Union of Grain Exporters, from July to October, grain exports decreased by only 1.5%, from 18.268 to 17.995 million tons, from July to October, from 18.268 to 17.995 million tons, in particular, wheat exports decreased by 3.5% from 15.596 to 15.036 million tons. , that USDA experts increased the forecast of wheat exports from the Russian Federation in 2022/23 to 42 million tons (33 million tons last year), and the IKAR agency increased it to 50 million tons.

Therefore, Russia will be forced to agree to the continuation of the grain corridor in order to intensify the export of its own grain, the supply of which may decrease in the event of increased sanctions.