EU Export Analysis for Cereals: Discounted Wheat Exportation from Russia Driving Down Prices in the EU Market
The global wheat market is currently experiencing a period of pressure, with exports from the European Union (EU) significantly decreasing since July 1. According to recent data, EU wheat exports amount to 2.177 million tons, which is 48% below the previous year's value.
Meanwhile, Russia, the world's largest wheat exporter, is estimated to have exported 43 million tons of wheat. To stay competitive, Russia has recently lowered its export prices. The strong dollar is also contributing to the pressure on wheat prices on the world market.
In a positive development, the Ukrainian wheat harvest is estimated to be at a maximum of 21.8 million tons by the Ukrainian agricultural union UAC. This figure is higher than the government's expectation of 21 million tons.
However, the large supply is putting further pressure on wheat prices. Many actors are currently waiting with imports due to the price development. The most traded December contract on the Paris exchange lost 1.25 euros/t and was at 194 euros/t.
The prices of wheat on the Euronext and CBOT have also been falling. The quality of the wheat harvest in Germany was good overall, but in some cases, the quality was lower, leading to corresponding price reductions for farmers. This has caused frustration on the farms.
The IGC forecasts that the global wheat harvest this year will reach a record level, estimated at 811 million metric tons. The harvest on the Northern Hemisphere has been abundant, contributing to the oversupply.
The main wheat suppliers on the global market, including Russia and China, are responsible for the price declines due to their high yields. These suppliers are putting pressure on the competition for European wheat production. India also produces a large quantity for domestic use and does not play a role as an exporter.
Rain is expected in the main growing regions, which will improve conditions for the next sowing. As of August 27, the September wheat on the Paris exchange fell by 2.5 euros/t and closed at 192.5 euros/t.
In the United States, 49% of the stocks are in "good" or "excellent" condition, which is 1% less than the previous week. The winter wheat harvest in the US is 98% complete, and the spring wheat harvest is 53% complete.
The US Department of Agriculture has reduced its projection to around 806.9 million metric tons due to smaller harvests in China, Argentina, and Brazil. Russian analytical agency IKAR now expects 86 million tons of wheat, 0.5 million tons more than previously.
Despite these challenges, farmers are feeling the impact of the falling prices. It remains to be seen how the market will recover and whether the current price trend will continue.
