September wheat futures on the US stock exchange on Tuesday, July 16, dropped to $5.27 per bushel ($193 per ton), although a week ago, on July 11, the price was at $5.78 per bushel ($212 per ton).
The head of the SovEcon analytical center, Andrei Sizov, associates the collapse in prices with good harvest prospects in the United States. Data on spring wheat crops in good and excellent condition exceeded analysts' forecasts and amounted to 77%.
In addition, sales of American wheat turned out to be higher than market expectations. During the week ending July 11, 0.53 million tons of wheat were shipped for export from the United States, against expectations of 0.28 million tons. That is, sales turned out to be twice as dynamic as market expectations.
After the publication of these data, prices began to collapse.
Positive for buyers (but negative for prices) harvest data came from Brazil. They relate to corn harvesting: it is 74% completed in the country, which is 36% higher than last year’s figure on the same date (July 11).
Wheat is also becoming cheaper on the European stock exchange. On Monday, quotes fell by 3% to $233 per ton.
At the same time, hot weather in the first ten days of July is assessed by experts as an unfavorable factor for the harvest of late crops in Ukraine. In some places, heat and lack of rain have already led to the death of some plants.
As for Russian wheat production, SovEcon forecasts it at 84.1 million tons compared to 92.8 million tons last season. Bad weather in late spring and early summer led to a decrease in yield. At the same time, both the export of Russian wheat and its prices are declining. In the first half of July, sales of Russian wheat amounted to 3.5 million tons compared to 5.5 million tons a year earlier. As for prices, in the Black Sea ports a ton of wheat costs $221 per ton (FOB) versus $232 per ton a year earlier.
A negative signal for the market came from Pakistan. The country has banned imports of wheat and flour amid expectations of a high domestic harvest.
If we talk about Kazakhstan, farmers have optimistic expectations for the current season in terms of volume, but alarming about prices. Several factors can lead to a drop in the price of grain: excess harvest, which will be difficult to sell to the country’s traditional markets (China, Central Asia), as well as logistics problems that will interfere with rhythmic shipments.