Wheat prices have taken a small step up from a week and a half of decline over the past trading session. This is due to reports pointing to an increasing demand for wheat. In addition, the export of grain from Ukraine remains difficult. The Polish Minister of Agriculture made firm statements about this.
The September wheat contract on the Matif closed yesterday (Tuesday 29 June) at €356,75 per tonne. That is an increase of €6,75 compared to the day before. On the CBoT, the July contract is up 2% to 9.21,25 per bushel (approximately €322 per tonne). Wheat prices were at their lowest level since February, mainly due to harvest pressure.
The mood is starting to change on the wheat market. Various parties see the current price level as a good time to get involved. The Algerian state grain agency OAIC secured a total of 740.000 tons of wheat in a tender last week. That is well above the expectation of 660.000 tons. Jordan has bought 60.000 tonnes of wheat in a tender that closed yesterday. Bangladesh and Pakistan have also issued tenders for wheat procurement. The buying wave creates additional demand for wheat and that effect is now noticeable on the futures markets.
Export issues
Supply from the Black Sea region remains a major uncertain factor hanging over the market. Russia is struggling with exports. Sanctions from the West and a sharply higher ruble are making buyers cautious about Russian wheat. To help exports, the Russian Ministry of Economic Affairs has decided to adjust the export tax for wheat and sunflower oil. The export tax was introduced at the time to control prices on the local market.
Exporting 20 million tons of grain from Ukraine before the end of July is next to impossible. Henryk Kowalczyk, the Polish Minister of Agriculture, said this yesterday in an interview with the Reuters news agency. The EU and the US have launched several plans to boost exports via alternative routes, but little progress has been made in implementation, according to Kowalczyk. Poland, which borders Ukraine for more than 400 kilometers, receives little support from Brussels to get grain exports going by land. According to the minister, there is a serious lack of mobile grain elevators and containers for rapid further transport. Kowalczyk called US President Biden's proposal to store Ukrainian grain in temporary silos in the EU (to prevent grain theft by Russia) interesting. Only the details are missing, including a time schedule.