Wheat prices are recovering in anticipation of the USDA forecast for the new season

After falling last week, wheat quotes are gradually recovering on data about the delay in planting spring wheat in the US, news about the blocking of exports from Ukraine and doubts about the extension of the grain agreement.

In 2022/23MR, Ukraine exported 14.5 million tons of wheat, which corresponds to the USDA forecast, but during the next 2 months, it could still ship 1-2 million tons of wheat. The ban on wheat supplies to the EU countries neighboring Ukraine and the accusations of falling prices in the EU are surprising, especially considering the increase in wheat supplies from the Russian Federation over the past 5 months. Sabotage of vessel inspections by Russian representatives in the SCC stopped the export of wheat from Ukraine, but the world market does not experience a shortage of grain, as supplies from the Russian Federation continue, including to Europe.

According to the forecast of Rusagrotrans, in May the Russian Federation can export a record 4.1 million tons of wheat for this month, which will be inferior to 4.4 million tons in April 2023. For the fifth month in a row, the export of wheat from the Russian Federation exceeds 4 million tons, while last year in this period it was half as much.

Already on May 11, the USDA will publish wheat balances for 2022/23 and 2023/24 MY. Analysts expect a decline in stock estimates next season to support prices for new crop wheat.

According to UN FAO estimates, world wheat production in 2023/24 will reach 785 million tons, in particular in the EU - 139.5 million tons, and initial stocks will amount to 309.7 million tons.

NASS USDA monitoring showed that as of May 7, in the United States, 24% of the area was planted with spring wheat (26% last year and 38% on average over 5 years), and corn - 48% of the area (21% last year and 42% on average over 5 years ). Farmers prefer to sow corn rather than wheat, so the area under spring wheat may turn out to be smaller than predicted. The number of winter wheat crops in good or excellent condition increased by 1% to 29% during the week, which corresponds to last year's level. During the week, Texas, Oklahoma, Kansas and Nebraska will receive 50-70 mm of rain, which will significantly improve the condition of crops.

July wheat futures fell in price yesterday:

• by 1% to $240.3/t - for soft winter SRW wheat in Chicago,
• by 1% to €237/t or $260.4/t - for wheat on the Paris Euronext,
• by 0.3% to $267.5/t - for Black Sea wheat in Chicago.

At the same time, July futures rose in price:

• by 1.4% to $310.2/t - for hard winter HRW wheat in Kansas City,
• by 0.9% to $310/t - for hard spring HRS-wheat in Minneapolis.

In Ukraine, the weather favors the development of winter wheat crops, although heavy rains and low temperatures lead to the development of diseases, so farmers will be forced to increase spending on fungicides.