The US market has continued its consolidation in the last week trading up $7/t due to concerns over supplies and a weaker US dollar. Also reports across individual states show that despite some improvement, winter wheat crop ratings remain historically low, especially in the key hard red winter wheat growing states of Kansas, Oklahoma and Texas. These poor ratings along with the return of warmer drier weather in Argentina and nervousness over Ukrainian production and export availability are all seen as positive price factors.
The recent rains in Argentina had surpassed the most optimistic forecasts providing a boost for growers, but rainfall was unevenly spread, and more is required. The Buenos Aires Grain Exchange cited that that the recent rains have slowed crop deterioration and, whilst seen helping late-planted maize have come too late to save the early crop. Also the current wetter than ideal conditions in Brazil are slowing down the soybean harvest and, in turn, the sowing of the country’s winter maize crop.
Ideal conditions in Australia
In contrast the USDA attaché sees Australia’s 2022/23 wheat crop at 37m tonnes, supported by near ideal conditions in Western and Southern Australia, just ahead of the official estimate of 36.6m tonnes. Also independent Baltic analysts SovEcon has raised its estimates of the Ukrainian 2023 wheat crop to 18.2m tonnes. Ukrainian grain exports had reached 26.3m tonnes as 27th January, including 9.4 million tonnes of wheat and 14.9 million tonnes of maize. The country’s 2023/24 grain crop is likely to fall to 35-40 million tonnes according to the Ukraine Grain Association and the reduced wheat output could create domestic shortfall and potential export restrictions.
Meanwhile EU wheat prices have firmed by up to €2/t on the week following the firmer global trend, although still pressured by continued aggressive Black Sea export prices. EU soft wheat exports had reached 18.8m tonnes as of 29 January compared with 17.4m tonnes 12 months ago. Morocco, Algeria and Egypt remain the leading destinations. UK wheat prices have firmed £6/t on the week as export activity offsets falling demand from the domestic industrial and animal feed sectors combined with a weaker pound.
