Wheat prices fall amid faster harvest and improved U.S. crop conditions

Yesterday morning, stock market quotations for wheat and other agricultural crops began to grow violently on the news of the termination of the grain agreement, but then the market realized that Ukraine will continue to export grain through the Danube ports, the capacity of which is sufficient to handle 8-10 million tons of wheat in the new season, with due to the lower harvest than last year.

According to the weekly NASS Crop Progress report, as of July 16, winter wheat in the United States has been harvested on 56% of the area (69% last year and the 5-year average), particularly in Kansas - on 71% (94% on average). The number of spring wheat crops in good or excellent condition for the week increased by 4% to 51% (71% last year). Rainfall this week will improve the condition of spring wheat crops, but will delay the harvesting of winter wheat.

In the period July 7-13, the export of wheat from the USA decreased in comparison with the previous week by 65% to 253.4 thousand tons, and in general in the season it amounted to 1.77 million tons (2.12 million tons last year).

Yesterday, September futures fell in price:

• by 1.1% to $240.2/t - for soft winter SRW wheat in Chicago,
• by 1.7% to $299.6/t - for hard winter HRW wheat in Kansas City,
• by 0.7% to $322.7/t - for hard spring HRS-wheat in Minneapolis,
• by 0.1% to $233.25/t - for Black Sea wheat in Chicago.

At the same time, wheat futures on the Paris Euronext rose by 0.2% to €232.25/t or $261.2/t.

According to FranceAgriMer, as of July 10, soft wheat in France has been harvested on 33% of the area (+23% for the week), which is inferior to last year's 45%, but ahead of the 5-year average of 26%. The number of crops in good or excellent condition for the week decreased by 1% to 80% (64% last year).

In Ukraine, demand prices for wheat (and corn) increased by $3-5/t during the week to $175-177/t with delivery to Danube ports amid reduced supply as rains delay harvests and ports are short of cargo declared barges.

In the Russian Federation, as of July 1, the remaining wheat amounted to 13.2 million tons, which exceeds the average 5-year indicator, and in view of this year's high harvest, the pressure on world prices increases. Russian traders report that the authorities secretly set the minimum export price for wheat at $240/t FOB, and the decision to withdraw from the grain agreement is due to expectations of an increase in world wheat prices.

In China, the wheat harvest in 2023 will decrease (for the first time in 7 years) by 0.9% year-on-year to 134.53 million tons due to excess rainfall in the main producing areas on the eve of harvest, especially since the sowing area has decreased by 0.4%, and productivity by 1.3%. But experts believe that the reduction of the harvest will not significantly affect the level of reserves in the country and domestic food prices, although it will lead to an increase in wheat imports.