Wheat prices rose 6% ahead of the release of the updated USDA report

After a long fall in commodity prices under the pressure of lower oil prices and expectations of an economic recession, grain traders stepped up purchases of wheat, corn and soybeans, which lost significantly in price, after analyzing global production and exports last week.

On Tuesday, the USDA's July report will be released, in which the forecast for world wheat production may be reduced due to a decrease in the harvest in the EU and the US, as well as adjusted balances for soybeans and corn due to refinement of production estimates in FY 2022/23.

On the US stock exchanges, wheat prices rose by 6.1-6.6% on Friday (adding 10.6-11.6% to the price in two sessions), and soybean and new crop corn - by 5.6- 6.5%.

In general, stock market quotations rose on Friday:

• by 6.6% or $20.21/t to $327.6/t – September futures for soft winter SRW wheat in Chicago (+10.6% over the last two sessions),
• by 6.4% or $20.76/t to $347.5/t - September futures for HRW hard winter wheat in Kansas City (+10.8%).
• by 6.1% or $21.04/t to $364.4/t - September HRS durum wheat futures in Minneapolis (+11.6%).
• by 1.4% or $5.25/t to $369/t - August futures for Black Sea wheat in Chicago (+2.4%).
• by 5.4% or €18.25/t to €357/t or $362.3/t - September wheat futures on Paris Euronext (+9.7%).
• by 4.6% or $10.7/t to $245.5/t – December corn futures in Chicago (+6.5%).
• by 2.2% or $11.4/t to $513/t – November soybean futures in Chicago (+5.6%).

The reason for the sharp increase in quotations was the reduction of corn contracts on the CFTC in the long position to a 21-month minimum and in the short position to the lowest level since October 2020, which confirms the withdrawal of speculative capital from the grain market.

Traders are now awaiting the USDA's new corn report, which may raise production forecasts for Brazil and the US due to expanded plantings.

According to the Ministry of Agrarian Policy, on July 8, Ukrainian farmers collected 1 million tons of grain from 3% of the area with an average yield of 2.63 tons/ha, namely:

• wheat - 355.8 thousand tons with a yield of 2.41 tons/ha,
• barley - 717.8 thousand tons with a yield of 2.82 tons/ha,
• peas - 24.6 thousand tons with a yield of 1.62 tons/ha.

In addition, from 43.5 thousand ha or 4% of the area, 67.3 thousand tons of rapeseed were threshed with an average yield of 1.5 t/ha.

The low yield in the south confirms a significant reduction in production in the current season, which will reduce farmers' profits and the possibility of sowing for the 2023 harvest, given the high prices of fertilizers, as well as low prices and problems in the sale of products. Some farmers say they will not sow grain for the 2023 harvest unless exports from seaports are unblocked.