Cotidienne | Cereals – Cereals: soft wheat prices are stabilizing, between concerns in Russia and good prospects in Australia and the United States

THE price soft wheat had accelerated their rise in the middle of the session on June 3 on Euronextagain due to climate concerns in Russia, leading some analysts to revise their 2024 production projections downward. But this upward movement subsequently ran out of steam, causing prices to finally stabilize between May 31 and June 3 on the European futures contract and by extension the physical market French. Some countries are revising their production prospects upwards, mitigating the rise in prices. THE growing conditions in Australia and the United States have been reassuring according to the latest figures from local authorities. Finally, the sharp decline in oil prices in New York and London also had a downward impact. The prices of feed barley and corn have also stabilized in France.

Concerning wheat tender, the Russian Union of Grain Exporters is now counting on a 2024 harvest of less than 85 Mt. barleyit would fall on the 19 Mt mark. All grains combined, the volumes are approaching the psychological bar of 130 Mt, while the previous forecast was close to 135 Mt. exports Russians of soft wheat would now flirt with the 45 Mt mark.
There weather report is expected to be even hotter and drier during the next two weeks in southern Russia, the production area of winter wheatwhile the rains persist in the production areas of spring wheat. However, the window of sowing possibilities is gradually closing, reports a trader. Operators mention the fact that the markets are already anticipating the worst-case scenario regarding the Russian harvest, and that the increase would therefore perhaps be overvalued. But others think on the contrary that climate risks in Russia are not yet fully integrated into prices.
Some private analysts are starting to envisage a 2024 Russian soft wheat harvest of less than 80 Mt. It will therefore be up to other exporting countries, namely the UNITED STATESTHE CanadaL’European UnionL’Australia or even theArgentina, to export more in order to compensate for the drop in Russian supplies. Problem: certain countries/regions are also experiencing climatic setbacks. This is the case of the European Union and particularly the France.

But other countries could get a harvest better than expected, which attenuated the increase on Euronext. This is for example the case of Australia. Abares, a service attached to the Australian Department of Agriculture, forecasts a 2024-2025 harvest of nearly 30 Mt, compared to just over 25 Mt in 2023-2024. That of barley is expected at more than 11 Mt. Then, the pace of exports Russians ran out of steam somewhat between April and May, reports analyst SovEcon, a sign of somewhat calmer demand last month. Finally, growing conditions are improving in the United States, and some harvest pressure is appearing. THE Crop Progress established by theUSDA reports a winter wheat harvest of 6%, compared to 3% on average over the last five years. Cultivation conditions are judged “good to excellent” in 49% of cases, compared to 48% last week. As for spring wheat, sowing is 94% complete, compared to 90% on average over 2018-2023; its growing conditions are judged “good to excellent” in 74% of cases, compared to 64% last year at the same time.

THE tenders Algerian and Egyptian are the sign of a certain return of international demand at the beginning of June. This will involve knowing their price levels to know if they are bullish or bearish for the market.
In the longer term, theEgypt is working on the possibility of building a port hub for receiving Russian wheat, reports Reuters. This would increase competition with other supplier countries in the years to come, a Source of pressure on world prices on the Egyptian destination, if this project materializes.

Note that the ban on Russian exports of durum wheat was not renewed, and ended on May 31, 2024, local authorities announced.

On the side of but, technical buying occurred in the European futures market, supporting prices. But the drop in prices on the CBOT in Chicago slowed the progression of European values. The latter ended at a level similar to that observed on Friday May 31. The June deadline on Euronext is no longer a reference. The good progress of sowing in the United States as well as the growing conditions considered favorable were the main downward factors. Technical selling on the US futures contract occurred. The USDA estimates that 91% of plantings have been completed in Uncle Sam’s country, compared to 89% on average over 2018-2023. Growing conditions are “good to excellent” in 75% of cases, compared to 64% last year at the same period.
Note the announcement by the USDA of a sale of 110,000 t of corn to theSpain. This information tempered the decline in values ​​in Chicago, but did not prevent it.

Note that at the northern EU level, the high water level of the Rhine disrupts the movement of cereals between France and Germany.

Fundamentals

• Russia, soft wheat, production : 84.6 Mt in 2024, 86.6 Mt previously (Source: Russian Union of Grain Exporters);
• Russia, barley, production : 19 Mt in 2024, 19.3 Mt previously (Source: Russian Union of Grain Exporters);
• Russia, corn, production : 15.3 Mt in 2024, same as above (Source: Russian Union of Grain Exporters);
• Russia, grains, production : 130.9 Mt in 2024, 134.2 Mt previously (Source: Russian Union of Grain Exporters);
• Russia, soft wheat, exports : 45.4 Mt in 2024-2025, 46.7 Mt previously (Source: Russian Union of Grain Exporters);
• Russia, barley, exports : 4.3 Mt in 2024-2025, same as previously (Source: Russian Union of Grain Exporters);
• Russia, corn, exports : 5.3 Mt in 2024, same as above (Source: Russian Union of Grain Exporters);
• Australia, soft wheat, production : 29.1 Mt in 2024-2025, 26 Mt in 2023-2024 (Source: Abares);
• Australia, barley, production : 11.5 Mt in 2024-2025, 10.8 Mt in 2023-2024 (Source: Abares).

International trade

• United States, corn, sale : 110,000 t to Spain, delivery for the 2023-2024 marketing year (Source: USDA).

French physical markets from June 3, 2024 (July base for cereals)

Quotations of milling products from May 28, 2024

Commercial quotations for dairy products from May 30, 2024

Dollar/euro evolution of June 3, 2024

Chicago Futures Market Close June 3, 2024

Closing of the Euronext futures market on June 3, 2024

International market quotes for June 3, 2024