Global wheat market: Russia considers revising export agreements, and wheat prices soar

 

On Friday, the Chicago Board of Trade (CBOT) closed at about $8.
695/pluton on the December soft red winter wheat period, up 7.
21%
from a week ago.
The Kansas City Futures Exchange's (KCBT) December hard red winter wheat period closed at around $9.
2925/p, up 5.
87 percent
from a week ago.
The Minneapolis Grain Exchange's (MGEX) December hard red spring wheat period closed at about $9.
275/pur, up 4.
21 percent
from a week ago.
Euronext closed at around €337.
75/mt for December 2022, up 5.
55%
from a week ago.
Argentina wheat spot quotes are $400/mt, unchanged
a week ago.
The ICE dollar index closed at 108.
997 on Friday, down 0.
47 percent from a week ago and down for the first time in four weeks
.

 

Russia questioned the Black Sea grain export deal

 

Russian President Vladimir Putin's speech this week added uncertainty to the future of Ukraine's export corridor, posing support
for wheat prices.
The agreement reached at the end of July is renewed
every 120 days after the parties agree.
The agreement expires at the end of November
.

 

On September 7, Putin accused Ukraine of shipping grain not to poor countries, as the agreement originally intended, but to European countries in large quantities
.
He said he would discuss with the Turkish president a change in the agreement to restrict grain exports to the EU
.
Turkish President Tayyip Erdogan said on Sept.
8 that Putin was right in his accusations that Ukraine's grain streams were moving to rich, not poor, countries
.
The Joint Coordination Centre (JCC) in Istanbul says about 30 percent of Ukrainian agricultural products are shipped to low- and lower-middle-income countries
to date.
About 100 cargo ships have left Ukrainian ports since the agreement was signed at the end of July, but the number of Ukrainian wheat shipments to traditional African clients is still not near normal.

 

Kremlin spokesman Peskov said on Sept.
9 that Putin and Erdogan would discuss the implementation of Ukraine's grain export agreement at an SCO summit in Uzbekistan next week, which both sides criticized
.
Peskov reiterated on Friday that the existing agreement is unfair to the poorest countries because most of the goods are shipped to Europe and other wealthy countries
.
Peskov said the agreements were being implemented but did not bring any concrete benefits
to poor countries.

 

Wheat prices are expected to rise as harvest pressures in the Northern Hemisphere recede

 

A report released by the Australian Agricultural Resources Economics and Sciences Agency (ABARES) shows that wheat export prices have continued to fall since the end of May as the northern hemisphere wheat harvest comes to market
.
With the conclusion of the Black Sea Trade Corridor agreement at the end of July, the gradual recovery of ukrainian grain exports by sea has also put downward pressure
on wheat prices.
But as harvest pressures in the Northern Hemisphere subside, wheat prices will rise
in the coming months.
ABARES expects the price of U.
S.
Hard Red Winter Wheat, the global benchmark for 2022/23, to rise 2% year-over-year to $
404 per tonne.
While global wheat production is expected to increase, demand will outstrip supply, resulting in a 2% year-on-year decline in ending stocks, which will support
wheat prices for the remainder of 2022/23.

 

Inventories of global wheat exporters are expected to decline, despite higher global wheat production

 

According to a quarterly report released by the Australian Agency for Abares, global wheat production is expected to increase slightly year-on-year to 780 million tonnes in 2022/23, but inventories in major exporting countries will fall, which will support
wheat export prices.
ABARES expects Russian wheat production to approach 90 million tonnes in 2022/23, a record high
.
However, rainy weather delayed harvesting and adversely affected
wheat quality.
Canadian wheat production is expected to recover to 34.
5 million tonnes, up 13 per cent
from the 10-year average.
U.
S.
wheat production is expected to increase 8 percent year-on-year to 48.
5 million tonnes, but remains 10 percent below the past 10-year average as drought constrains U.
S.
wheat yield potential and results in yields below the long-term average
.
It is worth mentioning that the production of hard red winter wheat in the United States in 2022/23 will decline by 23% year-on-year, so the supply of high-protein milled wheat in 2022/23 will continue to be tight
.
In Argentina, where dry weather affects wheat sowing and initial growth, ALARES expects Argentina's wheat production to fall by 16% year-on-year to nearly 19 million tonnes
in 2022/23.
EU wheat production is expected to decline in 2022/23 due to hot and dry weather, particularly in France
.
Ukraine's wheat production in 2022/23 is expected to fall by 41% year-on-year to 19.
5 million tonnes, reflecting a decline in
harvested area caused by the Russian-Ukrainian conflict.
In major exporters such as Argentina, the European Union and the United States, domestic consumption and exports will outpace supplies, leading to a decline in wheat ending stocks in major exporters in 2022/23, supporting higher
wheat prices.

 

Canadian wheat stocks are tight

 

Statistics Canada's inventory report shows that as of July 31, Canadian cereal stocks were tight as a severe drought in 2021 caused cereal production
to decrease.

 

As of July 31, canada's total wheat stocks totaled 3.
671 million tonnes, down 38.
3 per cent year-on-year and 41.
1 per cent below the five-year average and the lowest level
since inventory data were made available in 1980.
Wheat stocks excluding Durham wheat were 3.
106 million tonnes, down 39.
6 per cent year-on-year and 36.
5 per cent below the five-year average and the lowest level
since 1980.