Wheat prices are down after last week's speculative rally

On Friday and Monday, wheat quotations on world exchanges collapsed by 5-6%, almost leveling off the speculative growth of last week by 5-8%, caused by the escalation of the war in Ukraine by the Russian Federation. Uncertainty over further supplies from Ukraine and Russia keeps market volatility at 5-10%, and speculators continue to capitalize on rumours.

The global wheat balance for FY 2022/23 is quite good, and importers are not in a rush to buy wheat, so after a speculative jump, prices quickly fall again.

After a sharp rise last week, wheat prices have fallen since Friday:

• by 6.5% or $19.38/t to $315.3/t – December futures for soft winter SRW wheat in Chicago,
• by 5.7% or $18.37/t to $341.5/t - December HRW hard winter wheat futures in Kansas City,
• by 5.2% or $16.9/t to $342.2/t - December futures for HRS durum wheat in Minneapolis,
• by 1.7% or $5.25/t to $316/t - October Black Sea wheat futures in Chicago,
• by 1.4% or €5/t to €344.25/t or $331.6/t - December wheat futures on Paris Euronext.

Thanks to the work of grain corridors, Ukraine is increasing the rate of grain export. In September, 1.353 million tons of wheat were shipped, which is twice the figure of July and August. In total, 2.6 million tons of wheat were exported in the season (7.953 million tons on this date last year), which is 24% of the USDA forecast for 2022/23 MR of 11 million tons.

Long rains replenish moisture reserves, but delay the sowing of winter wheat. Therefore, according to experts, the area of its sowing can be reduced by almost 25%.

In the US, spring wheat has been harvested on 96% of the area (97% last year), and analysts expect an increase in crop forecasts.

According to Crop Progress, thanks to the warm and dry weather, 31% of the planned area was sown with winter wheat in the country, which is 1% higher than the average.

Exports of wheat from the USA for the week of September 16-22 decreased by 60% to 520.5 thousand tons, and in general in the season reached 7.778 million tons (8.134 million tons last year), while the USDA forecast for 2022/23 MR - 22.45 million tons.

Pakistan is likely to cancel the tender for the purchase of 300,000 tons of wheat, as it received only one offer at $400/ton C&F.

In Ukraine, the purchase prices for wheat in the Black Sea ports remain at the level of UAH 8,100-8,200/t or $210-215/t. Some traders, after the attacks on Odesa and Pivdenny ports, suspended purchases in order to complete shipments by the end of October, as they do not believe in the continued operation of the grain corridors. Currently, the purchase prices take into account all additional costs for the export of grain from Ukraine, so domestic farmers are underpaid by approximately $80-100/ton.

Russia will intensify wheat exports, which, according to Rusagrotrans, will amount to 4.2 million tons in September, and 4.4-4.5 million tons in October. In general, 10 million tons of wheat will be exported in the season as of the end of September, from the USDA forecasts for 2022/23 MR 42 million tons.

Prices for Russian wheat with 12.5% protein remain at $320-330/t FOB, which is $20-40/t lower than US or European grain prices, so Turkey, Egypt and Iran are actively buying Russian wheat, ignoring sanctions.