Week in focus on European wheat markets: French wheat prices continue to rise

 

On Thursday (April 21), the delivery price of first-class French wheat at the French port of Rouen was $448/ton, up $4 from a week earlier
.
The price range over the past 52 weeks is $240 to $460 per ton
.

 

On Thursday, the price of second-class wheat in Shanghe, Argentina was 439 yuan / ton, up 26 US dollars from a week ago; the US No.
2 hard red winter wheat price was 501 US dollars / ton, down 13 US dollars from a week ago; the US No.
2 soft red winter wheat price was 437 US dollars / ton, down 16 US dollars from a week ago
.

 

On Euronext in Paris, the most actively traded September wheat futures settled at 366.
75 euros a tonne on Friday, unchanged from a week ago, while Chicago wheat futures rose 4.
37%
.
This is mainly because the situation in the Black Sea is still tense, raising concerns that the supply of the Black Sea will be interrupted longer than earlier expected; the dry weather in the US winter wheat producing areas also constitutes a major support for wheat prices
.

 

　　On April 13, Egypt's General Directorate of General Commodities Supply (GASC) purchased 350,000 tons of European wheat through a tender
.
This includes 240,000 tons of French wheat, 50,000 tons of Bulgarian wheat and 60,000 tons of Russian wheat
.
This purchase is also the first purchase since the outbreak of the Russian-Ukrainian conflict on February 24
.
GASC's sudden return to the market to buy 350,000 tonnes of wheat amid a rallying wheat market at record high prices has worried market traders, consultancy Agritel said
.
The GASC purchase of wheat is a symbol of global panic over the coming months
.

 

　　The market is also assessing the competitive pressure posed by Indian wheat
.
Egypt recently approved Indian wheat as a new import source as an alternative to Ukrainian supplies
.
However, considering Egypt's quality requirements for imported wheat, the higher transportation costs from India to Egypt than European wheat, and the recent impact of heatwave weather on Indian wheat, which means that the size of India's harvest is uncertain, traders are on Indian wheat.
The outlook for the Egyptian market is cautious
.

 

　　The U.
S.
Department of Agriculture released a report on Monday that 30 percent of U.
S.
winter wheat was rated as excellent, down two percentage points from a week ago, below analysts’ average forecast and the lowest point for the same period since 01996, underscoring the drought in the U.
S.
plains
.

 

　　The French wheat crop is in much better shape, at least for now
.
In the week ended April 11, 92% of the French soft wheat crop was rated excellent, unchanged from the previous week and up from 86% a year earlier
.

 

　　In its April 14 report, Strategic Grains lowered its forecast for EU wheat exports in 2021/22 (starting in July) by 1.
1 million tons, from 32.
5 million in March to 31.
4 million, due to Russian wheat exports.
Better than expected
.
Strategic Grains raised its forecast for EU wheat exports in 2022/23 to 30.
3 million tons, up 500,000 tons from March, citing protracted conflict in Russia and Ukraine and unfavorable weather in U.
S.
winter wheat-producing regions
.
The agency also lowered its forecast for EU soft wheat production in 2022/23 to 126.
7 million tonnes, 200,000 tonnes below last month's forecast and more than 3 million tonnes below this year's output
.

 

　　The European Commission's first 2022/23 supply and demand report released on April 6 showed that EU wheat exports in 2022/23 may increase to 40 million tons, up from 33 million tons in the previous year, as the conflict between Russia and Ukraine reduces Ukrainian wheat export supplies
.
The European Commission also expects an increase in cereal production next season
.
The EU recently allowed farmers to use fallow land to grow crops, helping to boost yields
.
The 2022/23 EU winter wheat plantings are estimated to increase by 1% year-on-year
.
EU soft wheat production in 2022/23 is forecast at 131.
3 million tonnes, up from 130 million tonnes in the previous year
.

 

　　EU-27 wheat exports reached 21.
26 million tonnes in 2021/22 (July to June) as of April 17 (20.
63 million tonnes last week, compared to 22.
08 million tonnes in the same period last year), according to European Commission data.
The volume was 2.
02 million tons (1.
99 million tons last week and 1.
7 million tons in the same period last year)
.
The number one buyer is Algeria, but the import volume is still lower than the same period last year, with 3.
16 million tons of wheat imported so far (3.
1 million tons last week, 4.
81 million tons last year); its share is 14.
9% (15.
0% last week, 21.
8% last year) %)
.
The second largest buyer was Egypt, which imported 2.
3 million tons (2.
17 million tons last week and 823,000 tons a year earlier); its share was 10.
8% (10.
5% last week and 3.
7% last year)
.
The third largest buyer was China, which imported 2.
09 million tons (2.
04 million tons last week, compared with 1.
77 million tons in the same period last year), with a share of 9.
8% (9.
9% last week and 8.
0% in the same period last year)
.

 

　　Investment funds and financial institutions were net long 194,355 contracts in Euronext milling wheat futures and options markets as of April 15, up from 184,165 contracts a week earlier, Euronext holdings data showed
.

 

　　The euro traded at $1.
08 on Friday, down 0.
9% from a week earlier
.
The Fed chair on Thursday sounded hawkish, suggesting a possible 50 basis point rate hike next month, the same day European Central Bank President Christine Lagarde issued dovish remarks that the ECB may need to cut its growth outlook
.

 

　　Investors are also awaiting the results of Sunday's French presidential election, with polls showing incumbent Emmanuel Macron leading far-right rival Marine Le Pen with 55 percent of the vote
.
If Le Pen wins, it could stoke tensions with European allies and put pressure on the euro
.

 

　　Note: 1 Euro is equal to 1.
08 USD