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Global wheat market: Geopolitical risks escalate, exacerbating the risk of supply tensions

 Last Update: 2022-10-12
 Source: Internet
 Author: User

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October 3 news: In the week ended September 30, 2022, global wheat prices continued to rise, with Chicago wheat futures hitting a new high since June 29, as the U.
S.
Department of Agriculture lowered U.
S.
wheat production, exacerbating the already worrying global wheat supply and demand tensions
under the Russian-Ukrainian conflict.
Dry weather threatens wheat crops in Argentina and the United States, and the dollar has retreated from a 20-year high, also boosting the wheat market
.

On Friday, the Chicago Board of Trade (CBOT) closed at about $9.
215 a week earlier, up 4.
7 percent
from a week earlier.
The Kansas City Futures Exchange (KCBT) closed at around $9.
915 a week ago, up 4.
3 percent
from a week ago.
The Minneapolis Grain Exchange (MGEX) closed at around $9.
82 a week ago, up 3.
5 percent
from a week ago.
Euronext's December 2022 period closed at around 356.
75 EUR/mt, up 3% from a week ago; Argentine wheat spot quote at $410/mt, up 2%
from a week ago.
The dollar index closed at 112.
084 on Friday, down 0.
8 percent
from a week ago.

The U.
S.
Department of Agriculture released lower yield data than the industry expected

In its annual small grains report on Sept.
30, the USDA set U.
S.
wheat production at 1.
650 billion potons in 2022, below the average market analyst expectation of 1.
778 billion potons and lower than the USDA's August estimate of 1.
783 billion potons
.
This is because the dry soil in the western planting areas has cut yields and a large number of wheat crops have
been abandoned.

USDA's quarterly inventory report shows U.
S.
wheat inventories of 1.
776 billion potons on Sept.
1, up from 1.
774 billion potons in the same period last year, in line with industry forecasts
.
The U.
S.
Department of Agriculture said wheat use was 543 million potons in the June-August quarter, down 24 percent
from a year earlier.

U.
S.
analysts say that throughout the summer and even autumn, everyone was talking about the bad
wheat harvest.
USDA yield data confirms these market views
.

The U.
S.
wheat harvest hit the second-lowest level in the past 20 years, fueling concerns about global inventories as other major producers also saw yields lower than initially expected
.

U.
S.
winter wheat sown 31%

The USDA Crop Progress Weekly Report shows that this year's U.
S.
spring wheat harvest is nearing its end, with winter wheat harvesting progress ahead of historical averages
.
As of Sept.
25, the U.
S.
spring wheat harvest was 96 percent complete, up from 94 percent a week ago, 100 percent year-ago and 97 percent
from a five-year average.
U.
S.
winter wheat sowing progress was 31 percent, compared with 21 percent last week, 32 percent year-ago and a five-year average of 30 percent
.
The winter wheat emergence rate was 9%, 2% last week, 8% in the same period last year, and 6%
in the five-year average.

USDA's weekly export sales report shows that in the week ended September 22, 2022, U.
S.
2022/23 wheat net sales were 279,800 tons, up from 183,500 tons a week ago and within
market expectations.

Argentina wheat production is expected to decrease by 22% year-on-year

The Buenos Aires Grain Exchange released its first production estimate for 2022/23 on September 28, expecting wheat production to fall to 17.
5 million tonnes, down 21.
9% year-on-year, as Argentina is experiencing a severe drought
.

Abnormally heavy rains in India may not be conducive to wheat sowing

Officials from the Meteorological Service of India (IMD) said on Friday that India's October rainfall could be above average, posing a risk
to summer-sown crops such as rice and wheat cultivation.
Murut Yunjie Mohapattara, director of India's Meteorological Agency, said at a virtual news conference that rainfall in October is expected to be 115 percent
of the long-term average.
Heavy rains in October could damage mature crops such as rice, legumes, cotton and soybeans, and could delay wheat planting
in some areas.

Indian farmers start growing wheat in October and then harvest it in March and April of the following year

Russian wheat production has been raised, but export prospects are uncertain

Consulting agency IKAR raised its forecast for Russian cereal production to 150 million to 152 million tonnes in 2022, up from 147 to 148 million tonnes
forecast in early September.
Wheat production rose to 99 million tonnes to 100 million tonnes, up from 97 million tonnes projected in early September
.
Last week, consulting firm SovEcon raised its forecast for Russian wheat production to 100 million tonnes, up from earlier expectations of 94.
7 million tonnes, as spring wheat production increased
.

EU crop monitoring agency MARS on Monday (September 26) raised Russia's 2022 wheat production to a record 95 million tonnes, up from June forecast of 88.
8 million tonnes, up 25 percent from 76.
25 million tonnes from the previous year and 19 percent
from the five-year average of 79.
68 million tonnes.
Wheat production expectations after the MARS increase remain lower than those
of local Russian institutions.
Argentina's Buenos Aires Grain Exchange this week lowered its 2022/23 wheat production to 17.
5 million tonnes, down 21.
9 percent year-on-year, as the weather hit severe drought
.
Wheat sowing in Argentina has now ended
.

Canadian wheat production has been turned up

The September Supply and Demand Report released by Agriculture and Agri-Food Canada (AAFC) shows that all wheat production in Canada in 2022/23 is expected to be 34.
703 million tonnes, slightly higher than the August forecast of 34.
505 million tonnes, an increase of 55.
6%
year-on-year.
All wheat export estimates were slightly revised up to 23.
2 million tonnes from 23 million tonnes last month, also up from 15.
128 million tonnes
in the previous year.
The domestic usage data was revised down to 8.
999 million tons from 9.
425 million tons last month, down from 9.
612 million tons
in the previous year.
All Canadian wheat ending stocks for 2022/23 are expected to be 6.
3 million tonnes, up 400,000 tonnes from the August forecast and well above 3.
67 million tonnes
in 2021/22.

EU wheat production is on the rise

According to the European Commission's monthly report released on September 30, the available production of soft wheat in the EU in 2022/23 (July-June) was 127.
043 million tonnes, higher than the previous month's forecast of 125.
969 million tonnes, but still lower than the previous year's 130.
133 million tons
.
The EU left its 2022/23 soft wheat export forecast unchanged at 36 million tonnes, up from 29.
26 million tonnes in 2021/22 (last month's forecast of 29.
19 million tonnes
).
Ending stocks are expected to be 14.
53 million tonnes, down from 15.
72 million tonnes expected last month and down from 16.
57 million tonnes
in the previous year.

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