Global wheat market: drought in the United States and Canada, heavy rains in Europe, rising wheat prices

 

On Friday, the Chicago Board of Trade (CBOT) September soft red winter wheat futures rose by about 77.
5 cents or 12.
6% from a week ago, to close at 692.
50 cents per cat
.
The September hard red winter wheat futures on the Kansas City Futures Exchange (KCBT) closed at approximately 651.
50 cents/bus, up 57.
5 cents or 9.
7% from the previous week
.
The September hard red spring wheat futures on the Minneapolis Grain Exchange (MGEX) closed at about 917.
25 cents per bus, up 103 cents or 12.
7% from a week ago
.
Euronext's December 2021 milling wheat period reported about 216 euros/ton, an increase of 16.
5 euros or 8.
27% from a week ago
.
The spot price of Argentine wheat is 276 US dollars/ton, up 5 US dollars or 1.
85% from a week ago, FOB price
.
The Zhengzhou Commodity Exchange's wheat futures for delivery in September 2021 closed at about 2,763 yuan/ton, an increase of 5 yuan from a week ago
.

 

　　From the perspective of the main wheat producing areas in the world, the condition of spring wheat crops in the northern plains of the United States and the Canadian prairies has recently deteriorated because the local wheat has been affected by drought, and there may be another wave of high temperatures in the future
.
The Great Plains will begin to become hot again next week, damaging the yield potential of the spring wheat crop
.
The U.
S.
Drought Monitoring Report shows that 56% of the U.
S.
has varying degrees of drought, including nearly three-quarters of the U.
S.
Great Plains
.

 

　　The US Department of Agriculture's weekly crop progress report showed that as of July 11, the winter wheat harvest in the United States was 59% complete, with a five-year average of 65%
.
The excellent and good rate of spring wheat in the United States has stabilized at 16%, which is much lower than the 68% in the same period last year
.
The heading rate of spring wheat is 83%
.

 

　　In its July supply and demand report, the U.
S.
Department of Agriculture predicts that the U.
S.
hard red spring wheat production will drop sharply this year to the lowest level since 2002 due to widespread drought in the northern plains
.
The U.
S.
Department of Agriculture predicts that global wheat production in 2021/22 will be reduced by 2 million tons to 792.
4 million tons, but it will still be the highest in history because the decline in US production exceeds the increase in overseas production
.
US wheat production data is revised down 4.
1 million tons to 47.
5 million tons
.
The U.
S.
Department of Agriculture also lowered Russia's wheat production data by 1 million tons to 85 million tons, because some winter wheat crops were damaged by cold weather and spring wheat yields declined
.
Due to the downward revision of US wheat inventory data, the US Department of Agriculture lowered its forecast for global wheat ending stocks for the 2021/22 season by 5.
1 million tons to 291.
7 million tons
.
The 2020/21 global wheat ending stock data is revised down by 3.
3 million tons to 290.
2 million tons, partly because of Pakistan's inventory adjustments
.

 

　　In sharp contrast to the drought in Canada and the United States, frequent rains in Europe this summer helped improve the prospects for wheat production
.
In its monthly supply and demand report, the U.
S.
Department of Agriculture raised the middle index of the EU-27 wheat production forecast by 700,000 tons to 138.
2 million tons, a year-on-year increase of 9.
7% and a five-year average increase of 5%
.
The high rains in May alleviated drought concerns in most parts of Europe
.

 

　　The Strategic Grain Company issued a report on July 15 stating that the soft wheat production in the 27 EU countries will reach 133.
0 million tons in 2021/22, which is higher than the 131.
1 million tons predicted in June and more than 14 million tons higher than the previous year's output
.
This is higher than the 130.
4 million tons predicted by analysts
.
EU wheat exports are expected to be 31 million tons, higher than last month's forecast of 28.
6 million tons, and also higher than last year's 26.
9 million tons
.
However, the recent rainy weather in the southeastern and western regions of the European Union may affect the grain quality
.
The tropical storms in Germany and Belgium have caused severe flooding disasters, causing the market to worry about the loss of wheat yield and the decline in the quality of mature wheat
.

 

　　The supply situation in Russia is also starting to be worrying
.
Russia is the world's number one wheat exporter
.
Russia’s main export region, the southern region, yields lower than average wheat yields
.
Since analysis agency SovEcon lowered its wheat production forecast data in Russia, another consulting agency IAKR also lowered its wheat production data by 2.
4% to 81.
5 million tons, which is 800,000 tons lower than SovEcon's forecast due to dry weather in some areas
.

 

　　The US Department of Agriculture’s weekly export sales report shows that for the week ending July 8, 2021, the US’s 2021/22 net wheat sales were 424,700 tons, 46% higher than last week and 44% higher than the four-week average
.
The total sales of US wheat exports so far this year have reached 7.
12 million tons, a year-on-year decrease of 13.
8%
.