The increase in prices for European wheat reduces exports from the EU and contributes to increasing supplies from the Russian Federation

A sharp rise in prices for European wheat over the past month, caused by forecasts of a reduced harvest in the Russian Federation in 2024, led to a slowdown in exports from the EU and an increase in supplies of Russian wheat.

September wheat futures on the Euronex exchange in Paris in May rose by 14.3% to 259.25 €/t or $280.7/t, and in general, since March 1, they have risen in price by 29%.

According to the data of the European Commission (released 3 weeks late), the export of wheat from the EU for April 27 - May 3 amounted to only 41 thousand tons, and in general in 2023/24 MR reached 26.26 million tons, which is 4% lower than last year's pace . We will remind that in the May report USDA left the forecast of wheat exports from the EU at the level of 35 million tons (which will correspond to the level of the previous season). However, it is unlikely to be achieved in the two months remaining before the end of the season, so wheat stocks in the EU will increase.

SovEkon experts believe that in May the Russian Federation will break the wheat export record for this month by shipping 4.1 million tons, which is significantly higher than the 5-year average for this month of 1.5 million tons. According to the Russian Grain Union, wheat exports for May 1-20 amounted to 3.4 million tons, and in general in 2023/24 MR reached 50.5 million tons (including EAEU countries), while Russian analysts estimate it at 52 million tons, and the USDA increased its forecast to 53, 5 million tons compared to 48.1 million tons in 2022/23 MR.

Prices for Russian wheat with a protein content of 12.5% and delivery in May-June are $235-238/t FOB, which is $20-21/t lower than for German and French wheat, which strengthens the competitiveness of Russian grain. The difference between the prices of Russian and European wheat reached the maximum since the end of July 2023, when the "grain agreement" was canceled.

Against the background of weather anomalies in the center and south of the Russian Federation, SovEkon reduced the wheat production forecast by 7.2 to 85.7 million tons in three weeks, which led to an increase in prices. A price increase ahead of the new season will reduce demand from buyers until there is an understanding of the total global wheat harvest.

Following the prices of European and Russian wheat, purchase prices in Ukraine for wheat with a protein content of 11.5-12.5% increased to $200-210/t with delivery to the port, which is equivalent to $215-230/t FOB. The share of food wheat in the harvest of 2023/24 MR decreased due to heavy rains, so its stocks are quite low. In the new season, a decrease in wheat production is expected due to the reduction of sowing areas and the lack of precipitation in April-May, which will contribute to further price growth.