The delay in planting and the poor condition of the US crops are pushing up wheat prices

Despite the bearish USDA report, wheat prices on world exchanges started the week with an increase of 2-4%. The reason was the delay in planting and the poor condition of crops in the main agricultural regions of the United States, which may lead to a reduction in the harvest compared to last year.

According to NASS USDA data, as of May 14, only 40% of spring wheat acreage in the US was planted and 13% of seedlings were obtained, while the 5-year averages are 57% and 23%, respectively. In North Dakota and Minnesota, seeding rates are twice the average.

The number of winter wheat crops in good or excellent condition remained, as it was a week ago, at 29%. In the states of Texas, Kansas, and Oklahoma, precipitation failed to significantly improve plant condition, so 20%, 10%, and 11% of crops are in good or excellent condition there, respectively.

Exports of wheat from the USA for the week of May 5-11 amounted to 242.3 thousand tons, and in general in the season reached 18.7 million tons or 89% of the USDA forecast for 2022/23 MR.

According to the USDA's May forecast, in 2023/24 the US will increase wheat exports compared to the previous season by only 0.3 million tons to 45.2 million tons (although analysts estimate it at 48.7 million tons), but in fact it may be smaller, given the poor condition of the crops and the delay in sowing.

July wheat futures rose in price yesterday:

• by 4% to $242.8/t - for soft winter SRW wheat in Chicago,
• by 2.4% to $330.1/t - for hard winter HRW wheat in Kansas City,
• by 3.2% to $320.9/t - for hard spring HRS-wheat in Minneapolis.
• by 2% to €239.5/t or $260.7/t – September wheat futures on the Paris Euronext.

July futures for Black Sea wheat in Chicago remained at $265.75/t.

Blocking the operation of the grain corridor supports the prices of American and European wheat, although supplies of wheat from Ukraine are much smaller than from the Russian Federation. On May 1-15, Ukraine exported 582,000 tons of wheat, and a total of 15 million tons in the season, out of the 15 million tons predicted by the USDA.

According to Ruagrotrans, the Russian Federation exported 1.6 million tons of wheat for May 1-11, so the export forecast for May (including EAEU countries) was increased from 4.1 to a record 4.4 million tons, while the previous record set in 2018 r, amounted to 3.2 million tons. In the May report, the USDA increased the forecast of wheat exports for the Russian Federation in 2022/23 MR by 0.5 to 44.5 million tons.

Export prices for Russian wheat with 12.5% protein and delivery in May-June fell to $250-255/t FOB, while for Ukrainian food wheat for delivery to Danube ports (since purchases in Black Sea ports are stopped) - to $170 -$180/ton.

The delay in sowing of spring wheat in Canada, the USA and the Russian Federation, especially in Siberia, due to rains and cold weather may lead to a reduction in the area of sowing or a decrease in the yield of late crops.