There's some buying interest in the international wheat market, but that's not exactly boosting sentiment at the moment. The large global supply and the rapid sowing of winter wheat have dampened a temporary price rally.
Locally, we're still seeing some upside this week, but internationally, the trend is downward again. The Grain Exchange in Groningen is trading €1 higher this week at €185 per tonne. This still puts the market here considerably higher than the €178 per tonne seen in early October. While this still represents a low price level, it is at least a bit more friendly.
Meanwhile, in Paris, the closing price on Tuesday, November 11th, fell to €189,25 per tonne. This means the price is below €190 per tonne for the first time since October 23rd. The subsequent rally in wheat prices proved short-lived. Midway through last week, it briefly traded at just over €195 per tonne. After that, the downward trend began, and the gains of the past few weeks have completely disappeared.
Soft wheat in Chicago has fallen from $5,50¼ to $5,36 per bushel in a week. This translates to a price drop from €176 to €170 per ton. The dollar's slight depreciation over the past week is also a contributing factor.
Price pressure
Pessimism has once again prevailed in the wheat market. Price pressure has been exacerbated by the large supply this marketing season and the favorable conditions for sowing for the new season in the Northern Hemisphere. This latter factor is exacerbated by, among other things, rapid sowing in Ukraine and the expectation that the acreage there will increase by almost 4%. Reports from China indicate that a significant amount of winter wheat was sown in the past week, although sowing there is still lagging behind previous years.
Although some buying interest is being shown from various quarters, this isn't currently a determining factor in price trends. Following Egypt, Jordan and Algeria have also bought some wheat again. Supplies from the Black Sea region are being considered primarily.
Export is lagging behind
Exports from the European Union are still slightly behind last season. According to preliminary figures from the European Commission, a total of around 8,4 million tons of wheat had been exported until the end of last week. While subsequent shipments will likely close the gap of 8,7 million tons in the same period last year, exports could certainly use a boost. The EU harvest was much larger this year, and as a result, significantly more wheat is available for export.
According to the latest update from the European Commission, the EU harvested over 134 million tons of common wheat this year, along with an additional 8,3 million tons of durum wheat. This means there are 22,6 million tons more common wheat and almost 1 million tons more durum wheat available this year.
Fairly normal amount
The European Commission's latest estimate projects total exports of 31 million tons of soft wheat this season. This is a fairly normal amount, and perhaps even a bit low given the large harvest. However, it is almost 10 million tons more than the amount exported to third countries last season, according to the export overview. This means that wheat exports still have a significant catch-up to do to achieve this year's target.
Morocco won't be the main buyer of EU wheat this season, with over 1,5 million tons. Saudi Arabia is also more active in the market than last year. It's mainly traditional customers like Egypt and, in particular, Algeria that are buying less. Nigeria was a major buyer of EU wheat last year, but sales to that country are currently lagging far behind.