Speculative Wheat Price Collapse Accelerates, Leading to Decreased Export Demand for Wheat in Ukraine

The global wheat market remains in the hands of speculators who react to weather news, sharply increasing or decreasing the volumes of futures buying or selling.

Yesterday, wheat prices continued to fall, dropping by 2.7-3.8% in one day, with an overall decrease of 7.2-16.6% over the month, reaching levels lower than at the beginning of 2024. This decline followed a price drop which ended with a sharp 30% rise in March-May.

On Monday, July wheat futures fell:

- by 3.7% to $217.3/t for SRW wheat in Chicago (-16.6% for the month),
- by 3.8% to $222.5/t for HRW wheat in Kansas City (-15.6%),
- by 2.7% to $234.6/t for HRS wheat in Minneapolis (-16%),
- by 2.8% to €230.25/t or $247/t for September wheat futures on Euronext in Paris (-7.2%).

The reasons for the price decline included rains in Russia, increased production forecasts in Australia and Argentina, high harvesting rates in the USA, and improved spring wheat crop conditions in the USA.

Additional pressure on the markets came from a statement by a representative of the National Bureau of Statistics of China, which forecast another record grain harvest this year.

According to NASS USDA, as of June 16, winter wheat in the USA was harvested on 27% of the area compared to 13% last year and 14% on average over five years. The condition of winter wheat improved by 2% over the week to 49% (good and excellent) compared to 38% last year, and spring wheat by 4% to 76% compared to 51% last year.

Rains in central Russia will no longer improve the potential yield of winter wheat but will aid in the development of spring wheat.

Spring wheat planting in Russia as of June 10 was completed on 12.3 million hectares (92.3% of the plan), which is 1.3 million hectares less than in 2023. Consequently, the Russian Grain Exporters Union continues to lower its forecast for wheat production in Russia to 79.3 million tons, 17% less than last season, and has reduced the export forecast to 40 million tons, 33% less. This factor may later turn the prices upward again.

In Ukraine, the early grain harvest has begun, and the initial yield data are currently much lower than last year's.

Acting Minister of Agriculture Taras Vysotsky raised the wheat harvest forecast in Ukraine to 21 million tons and the export forecast to 15 million tons against the backdrop of improving weather conditions in June. The European agency MARS estimates the wheat harvest in Ukraine for the 2024/25 marketing year at 20.6 million tons, which is 25% less than last season and 25% below the five-year average. The area is estimated at 5 million hectares, 24% less than the five-year average.

During the week, wheat purchase prices in Ukraine continued to fall and lost another $5-8/t to $200-205/t for food wheat and $185-190/t for feed wheat with delivery to Black Sea ports. However, traders halted purchases yesterday in anticipation of price stabilization on the exchanges.

As of June 17, in the 2023/24 marketing year, Ukraine has already exported 18 million tons of wheat, 1.7 million tons more than last year. By the end of the season, another 400-500 thousand tons are expected to be shipped, exceeding the USDA forecast of 17.5 million tons.