Global wheat market: Wheat prices rise amid concerns over Black Sea situation, drought in U.S. producing areas

 

On the Chicago Board of Trade (CBOT), March soft red winter wheat futures settled at around 797.
75 cents a bushel on Friday, up 34.
5 cents, or 4.
52%, from a week ago
.
March hard red winter wheat futures on the Kansas City Futures Exchange (KCBT) settled at around 824.
25 cents a bush, up 38.
5 cents, or 4.
90%, from a week ago
.
March hard red spring wheat futures on the Minneapolis Grain Exchange (MGEX) settled at around 961.
50 cents a bushel, up 48.
5 cents, or 5.
31%, from a week ago
.
March 2022 milling wheat futures on Euronext traded at around €268.
75/tonne, up €3.
25 or 1.
2% from a week earlier
.
The spot price of Argentine wheat was $308/ton, up $1 or 0.
3% from a week ago, FOB price
.

 

　　Wheat market adds risk premium as West fuels Russia-Ukraine crisis

 

　　The geopolitical situation in the Black Sea region remained the focus of market attention this week
.
Although Russia has repeatedly denied that Russia plans to invade Ukraine, the US and Western governments and media have repeatedly played up the Russian-Ukrainian crisis
.
On Friday, the White House warned that enough armed forces had gathered on the Russian-Ukrainian border that a large-scale military conflict could break out at any time, and urged all American citizens to leave Ukraine within 48 hours
.

 

　　Both Russia and Ukraine are the world's major grain exporters, of which Russia is the world's number one wheat exporter and Ukraine is the world's major wheat and corn exporter
.
If the outbreak of the Russian-Ukrainian conflict slows or disrupts Black Sea grain exports, the EU and US wheat exports could benefit
.
Quotes from major global wheat exporters rose in the month to February 8, mainly due to concerns about tight supplies due to geopolitical tensions in the Black Sea, data from the International Grains Council showed
.
Canadian wheat rose the most, up $22/ton from a month ago; Australian wheat rose $5/ton, as the new season wheat was launched and international demand was strong, especially from China and Indonesia
.
Argentine wheat prices rose by $6/ton on strong import demand from Brazil
.
U.
S.
wheat quotations also rose by $8/ton, mainly due to continued dry weather in most parts of the U.
S.
winter wheat producing areas, resulting in poorer winter wheat crop conditions
.
However, EU wheat fell by $9/ton as a diplomatic dispute between France and Algeria led the latter to switch to Black Sea supplies; Russian wheat fell by $16/ton as Russia will impose export quotas on February 15, prompting importers to switch to other origins
.

 

　　Russian maritime drills yet to affect Ukrainian grain exports

 

　　Ukrainian grain exports have so far not been affected, traders said on Friday, despite Russian naval exercises in the Black and Azov Seas from Sunday and the closure of traditional shipping lanes
.
Ukraine is the world's leading exporter of grains and sunflower oil, through ports in the Black and Azov Seas
.

 

　　Ships to Ukrainian seaports in the Sea of ​​Azov will be blocked during Russian military exercises from February 13 to 19, the Ukrainian Seaports Authority said
.
Still, Ukrainian traders said the market was mostly quiet, with expectations that the navy would let merchant ships through
.
But some ship owners may be hesitant to ship Ukrainian grain because of the uncertainty
.
Mikola Horbachev, chairman of the Ukrainian Grains Association, said the drills further fueled market fears that it could turn into a conflict
.
Due to the uncertainty, traders are reluctant to purchase (Ukrainian) grains due to concerns about delays in shipments
.
Horbachev, however, did not give specific examples of ships being detained
.
On Friday, Ukrainian Deputy Economy Minister Taras Kachka said that Ukrainian trade has not been affected in any serious way, except for some relevant information that has an impact on the market
.

 

　　Increased drought in U.
S.
plains winter wheat growing areas

 

　　This week's U.
S.
Department of Agriculture's Drought Monitor report shows that the drought in parts of the Great Plains of the United States has expanded.
Although some areas have recently rained, the drought has not ended.
Winter wheat-producing regions still need more rain to boost winter wheat production.
The outlook encourages increased spring wheat acreage in the US and Canada
.
At present, the situation in the eastern Midwest of the United States is relatively good, but the melting of snow in other areas has led to an increase in soil moisture in areas with excess moisture content.
If there is not enough snow protection, another cold snap may cause some losses
.

 

　　U.
S.
supply and demand report's wheat data is lackluster

 

　　The U.
S.
Department of Agriculture's February supply and demand report showed that 2021/22 U.
S.
wheat ending stocks were raised to 648 million bushes from 628 million in the previous month, higher than analysts' forecast of 629 million bushes, but still down 23% from the previous year.

.
The average wheat farm price forecast was raised 15 cents to $7.
30 a bushel, the highest level in nine years
.
In terms of global wheat supply and demand, global wheat supply in 2021/22 was lowered to 1.
0663 billion tons, and ending stocks were also lowered by 1.
7 million tons to 278.
2 million tons, the lowest level in five years
.

 

　　Canadian wheat stocks are tight

 

　　According to the inventory report released by Statistics Canada, as of December 31, 2021, Canadian inventories of all major grains totaled 46.
677 million tons, a decrease of 30.
8% year-on-year and the lowest level since December 31, 2003
.

 

　　All wheat inventories in Canada were 15.
564 million tons, down 37.
8% year-on-year and 37.
5% lower than the five-year average.
It was also the lowest level since December 2002 and far below market expectations of 17.
3-17.
9 million tons
.