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Global wheat market: Russia's low-priced wheat exports led the global price decline

 Last Update: 2022-12-29
 Source: Internet
 Author: User

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Foreign media news on January 27: In the week ending November 25, 2022, global wheat prices fell, mainly because Russian wheat has recently attacked the export market with its low price advantage, forcing competitors to lower prices
.
However, severe droughts in wheat-producing regions in the United States and Argentina threatened crop yield potential, and flooding in Australia threatened wheat production and quality, limiting the decline
in wheat prices.

Chicago Board of Trade (CBOT) March soft red winter wheat futures closed at about $7.
97/bu on Friday, down 3.
04%
from a week ago.
March hard red winter wheat futures on the Kansas City Futures Exchange (KCBT) closed at about $9.
12/bu, down 1.
3 percent
from a week ago.
March hard red spring wheat futures on the Minneapolis Grain Exchange (MGEX) closed at about $9.
5875/bu, down 1 percent
from a week ago.
Euronext's March 2023 futures closed at around Eur318.
50/mt, down 0.
8% from a week ago; Argentine wheat spot quotations were $414/mt, down 0.
5%
from a week ago.
The ICE dollar index closed at 105.
917 on Friday, down 0.
85%
from a week ago.

Russian wheat prices are the most competitive, exports are growing

Russia's wheat production this year exceeded 100 million tons, and the huge export supply prompted Russian exporters to cut prices and promote discounts, which exceeded $30/mt relative to the international market, boosting the improvement of export prospects
.
Consultancy IKAR this week raised its 2022/23 Russian wheat export forecast by 2 million mt to 44 million mt
.
The USDA now expects Russia's wheat production in 2022/23 to be 91 million mt, up 21.
1%
from 75.
16 million mt the previous year.
Russian wheat exports in 2022/23 are expected to reach a record 42 million mt, up 27.
3%
from 33 million mt in the previous year.

Elena Tyurina, director of analysts at the Russian Grain Union (RGU), is more optimistic, predicting that Russia could export 50 million mt of wheat
in 2022/23.
Russia is likely to export about 5.
5 million mt of wheat in November, up 112.
8%
from November.
In the first five months of 2022/23, Russia will export 22.
9 million mt of wheat, up from 21.
7 million mt in the same period last year.

Tyurina said that Russian wheat is currently the preferred choice for importers, and the reduction in export tariffs also supports export growth
.
Despite the presence of stealth sanctions from the West, Russian exporters have adapted to exporting
in such situations.

U.
S.
winter wheat ratings remain at their worst level in the same period on record

The USDA's weekly crop progress report shows that as of November 20, the emergence rate of winter wheat in the United States was 87%, compared with 85% in the same period last year and the five-year average was 86%.

The winter wheat yield was 32 percent, unchanged from a week ago, well below the 445 in the same period last year and the lowest since records began in 1986
.
On November 20, topsoil moisture shortages to very shortages ranged
from 63 percent in North Dakota to 87 percent in Nebraska.
Major wheat-producing states with winter wheat ratings of more than 40 percent include Colorado (52 percent), Kansas (40 percent) and Nebraska (40 percent
).
The National Weather Service's 6- to 10-day outlook shows that temperatures in the northern plains and much of the western region could be lower than normal between November 28 and December 2, and Australian milling wheat supplies will be reduced

Flooding in eastern Australia is damaging wheat quality, meaning global milling wheat supply shortages could worsen
.
While the harvest may be large, heavy rains and flooding could cause large quantities of wheat to be downgraded to feed grade, reducing the wheat harvest that could be used for milling
.
The widening premium of milled wheat over feed wheat in eastern Australia hit a record high this month, suggesting that the market is already concerned
about wheat quality.
James Maxwell, an official with the Australian Crop Forecasting Company (ACF), said there was a lack of milling-quality wheat
across the east coast this year.
It is difficult to estimate the impact of flooding on wheat quality in eastern Australia, as the weather has prevented farmers from getting into their fields to start harvesting wheat
.
Weather agency Maxar said the weather across NSW would continue to be rainy
next week.
In addition, rainfall in parts of Western Australia has slowed the pace of
harvesting.
Local trade associations predict a bumper wheat harvest
this year.
Australian wheat output this year could still reach 26 million mt, almost triple the 2019/20 level, when drought reduced export supplies
, the USDA said.

Canada's wheat production is abundant and of good quality, and the government's increase in wheat exports is expected to lead to a bumper Canadian wheat harvest this year, with good quality, which will help alleviate fears
of the disaster in Australia.
The 2022 Crop Quality Report, released jointly by the Canadian Grain Council and the Grain Council of Canada, shows that a large proportion of the 2022 wheat harvest was rated first and second class, and all wheat varieties were high
in protein.
More than 90% of western spring wheat is rated first and second grade with above-average
protein content.
80% of Durham wheat is rated first and second class with above-average
protein content.
99% of the soft red winter wheat is rated first and second class, with high landing values and ideal
quality.

Agriculture Canada's November supply and demand report raised wheat export forecasts by 200,000 mt to 23.
5 million mt from 23.
3 million mt forecast in October, and stocks lowered accordingly to 6 million mt
from 6.
2 million mt.
Production remained unchanged at 34.
7 million tonnes, up from 22.
3 million tonnes in the previous year.

Statistics Canada will release its supply and demand report
next Friday, Dec.
2.

Reduced wheat production in Argentina prompted Brazil to turn to other suppliers

Argentina's wheat production has been damaged by severe drought and multiple frosts this year, and the Rosario Grain Exchange recently lowered its 2022/23 wheat production forecast to 11.
8 million mt and wheat export forecast to 6.
5 million mt, down from the previous forecast of 7 million mt and well below the average of 11.
7 million mt
.
The Buenos Aires Grain Exchange lowered Argentina's wheat production to 12.
4 million mt, compared with an estimated 20.
5 million mt at the beginning of the year and 22.
5 million mt
in 2021/22.
Due to significantly lower wheat expectations, the Argentine government has allowed exporters to delay contract performance for up to 365 days to ensure adequate
domestic supply.
This has already led neighbouring Brazil to turn to other suppliers, with flour millers in the northeastern region of the country already sourcing Russian wheat, with seven cartons set to arrive in Brazil in
the coming months.

China actively purchases French wheat

Early last week, news broke that Chinese importers had ordered two carloads of French wheat, followed by new deals, bringing the number of French wheat ordered by China to hundreds of thousands of tons
.
There are sources that China is buying seven to eight cartons of French wheat shipped on Panamax ships in quantities of about 400,000 to 500,000 tons, while traders say China may order as many as 10 cartons of wheat, equivalent to 600,000 to 700,000 tons, most of which will be shipped
in December.
This may reflect Chinese buyers wanting to run out of import quotas by the end of 2022, while Australia's recent wheat supply has been damaged by rainy weather that has slowed the harvest and raised concerns
about the quality of Australian wheat.
High domestic wheat prices in China also helped boost import demand
.

China's wheat imports were 1.
24 million mt in October, up from 530,000 mt in September and up 157.
4 percent
from October, according to the General Administration of Customs.
Wheat imports from January to October were 7.
87 million mt, down 2.
6%
year-on-year.

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