Global wheat market: The outlook for exports from the Black Sea is uncertain, with wheat prices rising and falling

 

On Friday, the Chicago Board of Trade (CBOT) closed at about $8.
5975 a week ago, down 1.
1 percent
from a week ago.
The December hard red winter wheat period at the Kansas City Futures Exchange (KCBT) closed at around $9.
3525/pu, up 0.
65%
from a week ago.
The December hard red spring wheat period at the Minneapolis Grain Exchange (MGEX) closed at around $9.
3875/pu, up 1.
21%
from a week ago.
Euronext's December 2022 period closed at around 333.
75 EUR/mt, unchanged from a week ago
.
Argentine wheat spot quote at $400/mt, unchanged
from a week ago.
The ICE dollar index closed at 109.
506 on Friday, up 0.
47%
from a week ago.

 

The September Supply and Demand Report, released by the USDA on September 12, shows that the 2022/23 US wheat supply and demand data is unchanged
.
Average farm prices for U.
S.
wheat in 2022/23 were cut by $0.
25 to $9.
00/pu, but still at record highs
.
In terms of global supply and demand data, global wheat supply, consumption, exports and ending stocks for 2022/23 were all revised upwards, which was bearish for wheat prices, with global wheat supply rising by 3.
6 million tonnes to 1,059.
6 million tonnes, as production increases in Russia and Ukraine outpaced the decline in opening stocks
.
Russian wheat production is estimated to rise by 3 million tonnes to a record 91 million tonnes
.
Ukrainian wheat production rose by 1 million tonnes to 20.
5 million tonnes as yields rose
.
Global wheat ending stocks rose by 1.
2 million tonnes to 268.
6 million tonnes as inventory increases in Russia, Ukraine, Canada and Australia outpaced EU inventories
.
However, this inventory will remain at its lowest level
since 2016/17.

 

How long the Black Sea Cereal Export Agreement can last has become the focus of
market attention.
Russia pointed out that since the signing of the Black Sea grain export agreement at the end of July, most of Ukraine's exports of grain have not been shipped to poor countries, but to rich European countries, and Ukrainian grain is shipped by American companies
.
The Russian government has pressured the United Nations to "explain" the implementation
of Ukraine's grain export agreement.
UN agreements show that only about 30 per cent of cereals are exported to low- and middle-income countries
.
Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan met on the morning of September 16 to discuss the agreement and whether its terms
should be changed.
Russia has said it wants to restrict Ukrainian grain exports to the European Union
.
President Vladimir Putin also said that if the West lowers sanctions, Russia is willing to provide free fertilizer
to developing countries.
He also hinted that the prospects for a Black Sea grain export agreement face uncertainty
if export restrictions on Belarus and Russia are not relaxed.
The deal, which will be renewed in November, is feared by analysts that the deal could break
down at any time, given the current tensions between the West and Russia and the Russian-Ukrainian conflict.
In addition, as the Russian-Ukrainian conflict continues, Ukraine may not carry out autumn sowing work as usual this year, threatening the prospects for
Ukrainian wheat production in 2023.

 

In South America, La Niña weather also threatens wheat crop growth
.
According to the Buenos Aires Grain Exchange, Argentina's agricultural region has suffered its worst drought in 30 years, forcing farmers to start abandoning some of their wheat
.
The exchange expects 15.
1 million acres
of wheat to be planted in 2022/23.
The USDA forecast Argentine wheat production at 19 million tonnes in its September supply and demand report, down from 22.
5 million tonnes
in 2021/22.
The planting of wheat in Argentina has now been completed and the harvest will begin
in late October and November.

 

In the United States, the spring wheat harvest is nearing its end
.
The USDA Crop Progress Report shows that as of September 11, the U.
S.
spring wheat harvest was 85 percent complete, up from 71 percent a week ago, 95 percent in the same period last year, and an average five-year progress of 89 percent
.
Winter wheat sowing was 10 percent complete, up from 3 percent a week ago, 11 percent in the same period last year, and an average five-year progress of 7 percent
.
Recently, however, drought has widened in the Great Plains, affecting the initial growth
of crops.
The U.
S.
Drought Monitor weekly report shows that in the week ended September 13, the area of drought in the plains of the United States expanded, with 88.
72% of the area in varying degrees of drought (D0 to D4), up from 80.
23% a week ago and the highest value since March 15, compared with 79.
24%
in the same period last year.

 

At present, international meteorological agencies generally expect the third consecutive year of La Niña in the northern hemisphere winter this year, which means that the southern plains of the United States may experience drought
for the third consecutive year.
Both U.
S.
weather models and European weather models predict drought
in U.
S.
winter wheat growing areas in the fourth quarter.
Although spring rains are essential for the growth of winter wheat after it returns to greenery, if the autumn rains are bad, winter wheat will not be able to tiller properly and will be susceptible to winter pests and diseases and strong winds
.
Soil moisture shortages are particularly pronounced
in southwestern Kansas, the Oklahoma and Texas Panhandles, and southeastern Colorado.
As of September 11, Kansas was 86 percent of the shortage to very short of surface soil, 71 percent of Colorado to very short of surface soil, and 73 percent
of Oklahoma to very shortage.

 

USDA's weekly export sales report shows that in the week ended September 8, 2022, U.
S.
net wheat sales in 2022/23 were 217,300 tons, up from 192,600 tons
in the previous week.
Total U.
S.
wheat exports and sales so far in 2022/23 were 10.
223 million tonnes, down 2%
year-on-year.

 

On September 15, Strategic Cereals raised its EU wheat production forecast
.
EU soft wheat production is expected to be 124.
1 million tonnes in 2022, up from 123.
3 million tonnes forecast last month, but still 4.
4%
lower than the previous year.

 

On September 14, Statistics Canada expected all wheat production to be 34.
7 million tonnes in 2022, slightly higher than the August estimate of 34.
6 million tonnes, up 56 percent year-over-year, and analysts expected all wheat production to be 34.
5 million tonnes before the report.