Wheat prices fall despite forecasts of a lower crop in the EU and record export sales in the US

Wheat quotations on world exchanges continue to fall, not reacting to forecasts of a reduction in production and activation of demand.

Based on preliminary harvest data, the Strategie Grains agency lowered its estimates for the EU grain harvest yesterday due to excessively dry weather. Thus, the forecast for the wheat harvest in the EU in 2022 was reduced from 124.4 to 123.3 million tons (129.9 million tons last year), although the initial estimate exceeded 135 million tons. At the same time, the forecast for the export of European wheat was left at the level of 30.4 million t, given its high competitiveness and active sales at the beginning of the new season.

The forecast takes into account that wheat deliveries by sea will be 30-50% of the usual capacity. And the results of the negotiations on the creation of corridors for the export of grain from Ukraine may lead to an adjustment of estimates.

Strategie Grains expects that Russia will be able to export 40 million tons of wheat, and if the harvest exceeds 89 million tons, then all 45 million tons.

The IKAR agency increased the forecast of wheat production in Russia by another 1.8 million tons to 90.5 million tons, which significantly exceeds the estimate of the Ministry of Agriculture of the Russian Federation of 87 million tons and the USDA's July forecast of 81 million tons.

Representatives of Ukraine, the Russian Federation, Turkey and the UN will meet next week to sign an agreement that will determine the parameters that will allow Ukraine to unblock grain exports from Black Sea ports. However, experts do not believe in solving this issue.

During July 1-7, the US exported 1.017 million tons of wheat, which was the largest weekly sale since July 2013. At the same time, 265.3 thousand tons of wheat were sold to China, but the market hardly reacted to this news.

Prices for American wheat fell more than for Black Sea and European wheat, which increases demand from importers.

Yesterday, stock quotes fell:

• by 2% or $5.79/t to $292.1/t – September futures for soft winter SRW wheat in Chicago,
• by 1.6% or $4.96/t to $311.9/t - September HRW hard winter wheat futures in Kansas City,
• by 0.2% or $0.92/t to $334.8/t - September HRS durum wheat futures in Minneapolis,
• by 0.25% to $359/t - August futures for Black Sea wheat in Chicago,
• by 0.4% or €1.5/t to €342.75/t or $343/t - September wheat futures on Paris Euronext.

Markets expect wheat procurement tenders to intensify this week. The State Agency of Jordan recently contracted 60,000 tons of flour wheat for delivery in November at a price of $413/t C&F.

During the week, prices for Russian food wheat with a protein of 12.5% in Black Sea ports fell by $10-15/t to $345-360/t FOB and will fall further as the crop is harvested.

Wheat continues to be harvested in Ukraine, but its yield is lower than last year, and farmers are in no hurry to sell. Demand prices for food wheat remain at a low level of UAH 3,500-4,500/t at elevators and UAH 5,000-5,500/t in Danube ports.