The wheat quotation is very cautiously in the process of recovering after the sharp price drop last week. The recovery of grain exports from Ukraine weighed heavily on the wheat quotation, in particular. The depth seems to have been reached now.
At the time of writing this article, the wheat quotations for the various contracts for wheat from the 2022 harvest on the Matif are cautiously in the plus with 0,3% to 0,4%. The mood on the CBoT is slightly less optimistic and wheat contracts move slightly in the plus and then slightly in the negative.
According to various experts, the cause behind the sharp decline in the wheat market in particular last week was the export of grain by Ukraine. The grain deal is slowly picking up steam. Yet it is not the case that all problems in the globally tight grain market have been solved. The UN Secretary, Antonio Gutterres, spoke on Saturday about problems surrounding the availability of ships, insurance and financing. Ukrainian exports are still well behind last year. This season, 19 million tons of grain have been exported until August 2,99, according to data from the Ministry of Agriculture. That is 51,6% less compared to the same period last year. In the harvest estimate, the Ukrainian Ministry of Agriculture assumes a total grain harvest of at least 50 million tons. Last year, the country still had a record harvest of 86 million tons, but because parts of the country are occupied by Russia and due to lower yields per hectare, Ukraine is far from achieving that this year. Perhaps an even bigger concern than this year's harvest is next year's harvest. The first crops already have to go back into the ground. The Vice-President of the Agricultural Council warns that a third of Ukrainian farmers do not want to sow winter cereals. The financial resources for this are simply lacking.
Also Black Sea wheat in the minor
The fact that the export of grain from Ukraine is starting to improve is not reflected in the listing for the Black Sea wheat. According to market agency IKAR, the price dropped by $25 dollars to $325 per ton at the end of last week free on board. Despite the lower price, no more Russian wheat has been exported. According to Sovecon, Russia exported 850.000 tons of grain last week, compared to 890.000 tons a week earlier. Due to the increasing supply of wheat in particular, prices are also under pressure on the domestic market. As a result, concerns about sufficient storage capacity are increasing among farmers. The harvest was huge, the export is moderate and the harvest of sunflowers and maize is just around the corner. There is therefore a run on storage equipment (silos, but also hoses, for example) according to Sovecon. The dry and above-average warm weather in Russia could soon lead to lower yields for summer crops and problems when sowing winter crops, warns Sovecon. According to the market office, Russian farmers have now sown approximately 172.000 hectares of winter grain. Last year in this period it was 288.000 hectares.