Wheat prices fell by 2.5-4.7% against the background of the acceleration of sowing in the USA and an increase in crop forecasts in the EU and the Russian Federation

After a long weekend in the USA and the EU, stock market quotations for wheat fell sharply on data about the acceleration of sowing in the USA and increased crop forecasts in the EU and the Russian Federation.

Markets are under pressure from active exports and an increase in the wheat harvest forecast in the Russian Federation. According to Rusagrotrans estimates, the Russian Federation will export 4.3 million tons of wheat in May (including to EAEU countries), which will exceed 1.35 million tons in May 2022 by 3 times.

Against the background of abundant rainfall in winter wheat growing regions and the acceleration of spring sowing, the SovEkon agency increased the forecast for the harvest in 2023/24 MR by 1.2 million tons to 88 million tons, which will exceed the average 5-year figure by 7%. Sowing of spring wheat is completed in the European part of the Russian Federation, in the Central Federal District, the sowing area has exceeded the forecast, in the Urals the pace of sowing is ahead of last year, and in Siberia it continues to be inferior to them.

According to USDA's weekly Crop Progress, 85% of U.S. spring wheat acreage was planted as of May 28, 1% below the 5-year average. The number of winter wheat crops in good or excellent condition for the week increased by 3% to 34% (29% last year), but the condition of the crops worsened in Kansas.

As of May 25 (6 days before the end of the season), wheat exports from the USA amounted to 19.558 million tons, so it will not be possible to reach the predicted USDA 21.09 million tons.

Yesterday, July futures fell in price:

• by 4.4% to $217.2/t - for soft winter SRW wheat in Chicago (minimum from April 2021),
• by 4.7% to $288/t - for HRW hard winter wheat in Kansas City,
• by 3.2% to $291.4/t - for hard spring HRS-wheat in Minneapolis,
• by 1.2% to $253.75/t - for Black Sea wheat in Chicago,
• by 2.5% to €220.25/t or $235.6/t – September wheat futures on Paris Euronext (minimum from October 2021).

The European Commission increased the forecast for the production of soft wheat in the EU in 2023/24 MR by 1.7 to 132.5 million tons, which will exceed last year's 126 million tons by 5.2% and by 5.8% - the average 5-year indicator - 125.3 million tons.

The Union of German Cooperatives predicts that due to dry weather in 2023, the gross harvest of wheat in Germany will amount to 22.31 million tons, which will be 0.9% less than last year's figure.

The forecast for the production of common wheat in Spain in FY 2023/24 has been reduced by 0.5 million t to 3.7 million t (5.1 million t in FY 2022/23), while for Turkey the harvest estimate has been raised to 20.5 million tons, which will exceed last year's figure by 3.8%.

The Canadian MSG estimates the harvest of major crops in FY 2023/24 more modestly than the USDA, in particular wheat production at 35.8 million tons (37 million tons USDA), which will exceed the 33.8 million tons of the 2022/23 season, but will be inferior to the record 37 .6 million tons in the 2013/14 season.

Export demand prices for Russian wheat with a protein content of 12.5% and delivery in June-July have decreased to $235-240/t FOB, while Ukrainian wheat is offered only at $190-200/t FOB due to expensive freight from Black Sea ports due to sabotage inspections by Russians as part of the SCC.