Global wheat markets: U.S. wheat plummets after hitting 14-year high

 

On Friday, the Chicago Board of Trade (CBOT) May soft red winter wheat futures closed at 1106.
50 cents per bush, down 102.
5 cents, or 8.
48%, from a week ago
.
May hard red winter wheat futures on the Kansas City Futures Exchange (KCBT) settled at around 1,089.
25 cents a bush, down 125.
25 cents, or 10.
31%, from a week ago
.
May hard red spring wheat futures on the Minneapolis Grain Exchange (MGEX) settled at around 1,070.
25 cents a bush, down 76.
75 cents, or 6.
69%, from a week ago
.
Euronext's May 2022 milling wheat futures traded at around €370.
75/tonne, down €1 or 0.
3% from a week ago
.
Argentine wheat was quoted at $421/ton, up $3 or 0.
7% from a week ago
.
The U.
S.
dollar index closed at 99.
13 on Friday, up 0.
6% from a week earlier
.

 

　　54% surge in 11 trading days

 

　　Since the outbreak of the Russian-Ukrainian conflict, due to concerns about severe global supply disruptions, Chicago wheat futures have led global wheat prices to soar in a row, hitting a 14-year high of 1,364.
5 cents at the open on March 8, compared with February 23 before the outbreak of the Russian-Ukrainian conflict.
It closed 54.
4% higher at 883.
25 cents
.
Such a strong rapid surge is rare! Despite this week's correction in wheat prices, Friday's close was still up 25% from Feb.
23
.
The rise in futures prices was mainly due to concerns about disruptions to Black Sea wheat exports, as Russia and Ukraine account for 29% of global wheat exports
.
It is difficult for other supplier countries to fully fill this gap
.

 

　　The fund made a lot of money and made a lot of profits, and the future price plummeted

 

　　The soaring price of wheat is not unrelated to speculative capital
.
As of the week to March 8, speculative funds flipped long in the Chicago wheat futures market, with a net long position of 27,000 contracts, the highest net long position since mid-August last year
.
During the same period, Chicago wheat futures surged 46% and hit a new high in 14 years at the opening on March 8.
Later, the fund bulls closed their positions aggressively and took the floating profit for safety, which once caused the futures price to change from a rise of 5.
4% to a fall of 10%.
Volatility is as high as 15%
.
The next day, the US Department of Agriculture released a supply and demand report on Wednesday without raising its forecast for US wheat exports, which once again became a catalyst for price declines
.

 

　　USDA report triggers price correction

 

　　Ahead of the March supply and demand report, analysts were widely speculating that U.
S.
wheat could get a share of the disruption in Black Sea wheat exports, so it was expected that the U.
S.
Department of Agriculture might raise its forecast for U.
S.
wheat exports and lower U.
S.
wheat inventories to 633 million bushels
.
However, the U.
S.
Department of Agriculture pointed out in the report that U.
S.
wheat prices are uncompetitive, and sales and exports have so far been lower than expected, so U.
S.
wheat exports in 2021/22 were lowered to 800 million bushels, down 10 million bushels from the previous month.
; U.
S.
wheat ending stocks were also raised 5 million bushels to 653 million bushes
.
The farm price estimate for wheat was only slightly raised to $7.
50 a bushel as farmers have already sold most of the wheat
.

 

　　U.
S.
wheat prices rise the most, curbing export demand

 

　　U.
S.
wheat prices have risen too high, making their exports less competitive
.
U.
S.
wheat prices have risen the most among exporters over the past month
.
As of March 7, the FOB price of US Gulf protein 11.
5% hard red winter wheat was US$539 per ton, an increase of US$162 from a month ago; during the same period, the FOB price of 13.
5% protein western red spring wheat in Vancouver, Canada was US$478 per ton, higher than a It was up $60 a month ago; first-class French wheat in the port of Rouen, France, was at $460 a tonne, up $150 from a month ago, as Algeria will allow French wheat to participate in future tenders due to strong demand in the Middle East and North Africa
.
Wheat in Argentina's Upper River region was at $425 a tonne, up $116 from a month ago, as Brazil and some buyers in Africa, the Middle East and Southeast Asia were aggressively buying
.
Milling wheat in Russia was at $405 a tonne, up $87 from a month ago, but demand for wheat was dull due to sanctions
.
Australian wheat was at $395 a tonne, up $47 from a month ago, the smallest price increase of any exporter, as bulk supplies of new wheat hit the market
.

 

　　Australia and India wheat exports expected to benefit

 

　　Australia and India benefited the most from the disruption of Black Sea wheat exports
.
The U.
S.
Department of Agriculture lowered 2021/22 Ukrainian wheat exports to 20 million tons from 24 million last month, and Russian wheat exports to 32 million from 35 million
.
The USDA raised its 2021/22 Australian wheat exports to 27.
5 million tons, up 2 million tons from the previous month, and India's wheat exports to 8.
5 million tons, up 1.
5 million tons from the previous month
.

 

　　Major global importers scrambled to buy wheat as the flow of Black Sea wheat was hampered by the conflict in Russia and Ukraine, with buyers starting to consider forward contracts for Australian wheat as far as the third quarter, major Australian shipper CBH Group said
.
From Friday, CBH will provide more than 500,000 tonnes of capacity to meet the new demand, said Ben Dierle, CHB's head of trading
.
Western Australia will ship 17 million tonnes of wheat, nearly 20 per cent more than the previous record export volume from the major wheat-producing state
.
But meeting demand in the short term is a challenge as Australia's limited export capacity has been booked for several months, prompting buyers to order more forward positions, while uncertainty in the Black Sea has brought more challenges to contract execution.
great pressure
.

 

　　Indian traders say they have recently received many inquiries from buyers looking for alternatives to Black Sea wheat
.
In recent days, Indian merchants have signed contracts to export about 500,000 tons of wheat, with FOB prices ranging from $340 to $350.
In contrast, earlier Indian wheat export prices were quoted at $305 to $310 per ton, FOB prices
.
India has had a record wheat harvest for five consecutive years and has ample domestic wheat stocks
.
India's state-owned Food Corporation (FCI) currently holds 52 million tons of buffer grain stocks, including nearly 24 million tons of wheat stocks
.

 

　　Global wheat stocks rise 3.
3 million tons

 

　　The USDA report also showed that global wheat ending stocks at the end of June 2022 will reach 281.
5 million tons, 3.
3 million tons higher than last month's forecast of 278.
2 million tons
.
This is mainly because Russian stocks are raised by 2.
46 million tons to 13.
09 million tons; Ukraine's wheat stocks are raised by 3 million tons to 5.
01 million tons
.
However, wheat stocks in Canada, Australia, India, and the European Union all declined slightly
.
This means that rising inventories do not equate to looser export supplies, as the overstocking of wheat inventories in Russia and Ukraine is precisely the result of continued disruption to exports
.

 

　　Drought hits U.
S.
winter wheat crop

 

　　As of March 6, winter wheat crop conditions in parts of the U.
S.
Great Plains continued to deteriorate, with 24 percent of Kansas, the top winter wheat growing region, in good to good condition, down from 25 percent a week earlier, according to the U.
S.
Department of Agriculture.

.
The state has a short-to-very short-to-very-short ratio of surface moisture, and a short-to-non-short ratio of bottom moisture of 78%
.
This compares to 80% and 77% a week ago
.
Texas, the second-largest winter wheat producing region, had 7 percent of its winter wheat in good to good condition, down from 8 percent a week ago
.
Texas wheat has a 75% deficit rate, unchanged from a week ago
.
Oklahoma's winter wheat was 15 percent good to good, up from 11 percent a week ago
.
Oklahoma's winter wheat jointing rate is 4 percent, on par with the five-year average
.
The USDA will resume publishing its weekly national crop progress report in April
.