Posted on February, 14, 2024 at 09:32 am
Old crop wheat prices remain under pressure. UK wheat futures (May-24) have lost over 14% since the start of 2024, and pressure continues to loom on the market. Large global demand appears to be absent with North African and Southeast Asian demand currently subdued on the hopes grain prices move even lower.
The domestic price has weakened with Paris wheat futures, which have reduced to compete for export business with Russian grain. For context, up until 28 January, the EU has exported 18.2 Mt of common wheat, with expectations that exports are going to reach 31 Mt. This means between the end of January to June, 12.8 Mt needs to be exported or risks weighing on the closing stocks of the EU’s balance.
However, to shift this grain, prices need to be competitive to other origins such as Russian wheat. Russia’s market share has been growing with large production over the last couple of years. Last week it was reported that their wheat price has fallen further, bringing down the floor of global wheat prices.
Moreover, quarterly official data showed that the level of wheat stocks in Russia are at a record-high. As of January 01 2024, stocks were pegged at 36.5 Mt up 1% year-on-year (Sovecon, LSEG). Also, Russia’s Agriculture Ministry proposes to increase the grain export quota (up until June 30) to 28 Mt, increasing by 4 Mt on current volumes.
Sovecon’s latest data estimates February grain exports (wheat, barley & maize) at 3.7 Mt, down from 4.6 Mt the month before. 3.0 Mt of that total exports is made up of wheat.
If February data is as estimated, for 2023/24 Russia will have exported 33.1 Mt of wheat, with anticipation that wheat exports are going to reach near 50 Mt for the 2023/24 market year.
With all this information and no weather story in South America, grain prices will most likely remain under pressure as stocks will need shifting and clearing before 2024 harvest, there is only so much grain that can be taken into the 2024/25 marketing year.
Source: AHDB