Wheat prices on the grain exchanges took a step back in the past trading session. The availability of wheat from the new crop is pushing prices down. As a result, the problems with the export of wheat from the Black Sea region are somewhat pushed into the background, but they have certainly not gone away.
On the Matif, the loss for the September wheat contract was limited to €3,25. The contract closed at €388,25 per tonne. The price therefore remains neatly between the resistance level at €400 per tonne and the support level at €378 tonnes. Based on technical indicators the advice for wheat remains neutral for the time being. For the longer term, a decline in the price could be coming.
In America, where the wheat harvest is more advanced, prices are under more pressure. At the time of writing this article, the price for the July contract is almost 2% lower compared to the closing price before the weekend. Yesterday (Monday June 20) the fair was closed due to a national holiday.
Little decisiveness
The difficulties with the export of wheat from Ukraine are somewhat less acute due to the progress of the grain harvest in America and now also in Europe. However, little progress is being made in restarting these exports. Tukrije is trying to mediate between the warring parties to reopen the Black Sea ports for grain exports. Europe is trying to increase exports by rail and via the Danube and US President Biden launched a plan for additional storage capacity at the border with Ukraine.
According to analysts, these are potentially good solutions, but the timeline is very short. There is still sufficient storage for the wheat, barley and rapeseed harvest. It will be exciting for the crops that will be grown later. In recent months, little progress has been made to really get transport going, given the latest export figures from the Ukrainian Ministry of Agriculture. There are many doubts among analysts about whether this tide can be turned in the next two or three months. The loss of grains from Ukraine lays a solid foundation for the grain price, according to experts. A downward correction during the wheat harvest is not unthinkable or even likely according to some sources. It is not considered likely that the price will drop completely.
Lower yield
In the European Commission's Mars bulletin published yesterday, yield expectations for most grains and oilseeds have been revised downwards. The average yield of common wheat - the most widely grown crop in the EU - is set at 5,76 tonnes per hectare in the June edition of the report. A month earlier this was still 5,89 tons per hectare. The yield is therefore 1,3% below the five-year average and 4,7% lower than last year. Persistent drought in large parts of the EU is the main culprit behind the lower yield forecast. However, a relatively low yield is already largely included in the price.