Wheat prices in Ukraine are gradually increasing, while in the US they are decreasing against the backdrop of active precipitation

The war with Iran continues, but global wheat markets are not yet reacting strongly to it, as the increase in delivery costs offsets the increase in prices among importers, who are also not increasing purchases yet.

Wheat prices on US exchanges fell by 1-3% over the week amid heavy rainfall that will continue this week, although the condition of winter wheat crops is now worse than last year.

According to the USDA's first crop condition report, 35% of the U.S. winter wheat crop is now in good or excellent condition (48% last year), which is significantly lower than analysts' estimates of 42%. At the same time, 2% of the planned area has been sown with spring wheat in the U.S., which is in line with last year's level.

During the week, May wheat futures fell:

• by 2% to $218.7/t - for SRW wheat in Chicago,
• by 3% to $223.5/t – for HRW wheat in Kansas City,
• by 1% to $237.2/t – for HRS wheat in Minneapolis,
• by 0.6% to €202.5/t or $233.5/t - for wheat on Euronext in Paris.

For the first time in nearly four years, hedge funds are largely long wheat, hoping for a price increase due to dry weather in the United States and shortages of fertilizer and fuel due to the war in the Middle East. Long wheat positions in Chicago exceeded shorts by 8,641 contracts between March 25 and 31, according to the weekly report from the U.S. Commodity Futures Trading Commission on Friday.

Ukraine is experiencing a seasonal increase in wheat supply, but increased demand from traders is supporting prices. During the week, export purchase prices for food wheat increased by 50-100 UAH/t to 10,900-11,100 UAH/t or $221-224/t, and for feed wheat - to 10,700-10,800 UAH/t or $214-216/t with delivery to Black Sea ports.

Constant shelling of port infrastructure delays the approach and loading of ships, which slows down the unloading of grain from railcars, so some traders are limiting purchases. Against the backdrop of the blockade of the Persian Gulf, many importers of Ukrainian wheat have practically stopped purchases, which also reduces export demand in Ukraine.

Markets understand that if the US and Iran do not reach a peace agreement in the coming days, the US-Israeli war with Iran, which has been going on for 39 days, will drag on for a long time, which will lead to further increases in prices for oil, grain and other agricultural products.