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Foreign media news on November 23: As of the week ending November 22, 2024, global wheat prices have risen due to concerns over grain exports caused by the escalation of conflict in the Black Sea region. The International Grains Council has lowered its global wheat production forecast, and US wheat export sales have performed well. However, in recent times, the wheat crop situation in some major production areas has improved, and Australia's high wheat yield is expected. In addition, the continuous rise of the US dollar has limited the upward trend of wheat prices.
On Friday, the Chicago Board of Trade (CBOT) closed the March soft red winter wheat season at around $5.6475 per bushel, up 1.94% from a week ago. The March hard red winter wheat season on the Kansas City Futures Exchange (KCBT) closed at around $5.655 per bushel, up 2.40%; The March hard red spring wheat season on the Minneapolis Grain Exchange (MGEX) closed at around $6.015 per bushel, up 1.73%. Euronext closed March wheat at 231.00 euros/ton, up 3.1%; The price of wheat on the river in Argentina is $225 per ton, up 1.8%. On Friday, the ICE US dollar index closed at 107.507 points, up 0.78% from a week ago.
Black Sea tensions suddenly escalate, wheat market adds risk premium again
At the beginning of this week, the Biden administration, which will leave office in January, allowed Ukraine to use US weapons to attack Russian territory for the first time. Ukraine randomly used US long-range missiles to attack Russian territory on Tuesday, which was also the 1000th day of the Russia-Ukraine conflict. On Wednesday, Ukraine launched multiple British "Storm Shadow" cruise missiles at Russia. On Thursday, Russia launched a newly developed hypersonic ballistic missile at Ukraine's Dnipro as a warning to Western countries that support Ukraine. The conflict between Russia-Ukraine conflict has escalated tit for tat, and the geopolitical risk premium has returned to the grain market again. Russia and Ukraine are both major wheat exporters. The wheat market is also extremely sensitive to the evolution of the Russia-Ukraine conflict, because any disruption of the supply chain may cause another huge wave in the global wheat market.
Improvement in US wheat export sales
The US Department of Agriculture's export sales report shows that as of the week ending November 14th, net wheat sales in the United States were 550000 tons, 45% higher than the previous week and 29% higher than the four week average. So far this year, the total sales of wheat in the United States have been 14.8 million tons, a year-on-year increase of 22.7%. The US Department of Agriculture's export target is 22.45 million tons, an increase of 16.7% year-on-year.
From the perspective of export prices, on November 21st, the FOB price for French wheat was $238 per ton, an increase of $11 from a week ago; The FOB price of Argentine wheat in Shanghe is 222 US dollars, an increase of 1 US dollar; The FOB price of US soft red winter wheat in the US Gulf is $249, an increase of $6; The FOB price for hard red winter wheat in the United States is $254, up $9. On November 22nd, the export price of Russian wheat from the deepwater port was $228 per ton, an increase of $2 from a week ago.
US drought continues to ease, wheat crop conditions improve
According to the Crop Progress Weekly report of the US Department of Agriculture, as of November 17th, the excellent rate of winter wheat was 49%, higher than 44% a week ago and 48% in the same period last year. This is also the highest level in the same period in five years, as plain rainfall supplements soil moisture. The winter wheat sowing is 94% complete, with an average progress of 96% over the past five years. The drought monitoring report shows that the drought situation in winter wheat production areas continues to ease. As of November 19th, about 40% of winter wheat is in arid areas, a decrease of 3% from a week ago and the third consecutive week of decline, lower than the 41% in the same period last year.
The low wheat prices in Russia have led to losses for farmers, and the planting area for wheat harvested next year may decrease
With the improvement of crop conditions in major wheat producing countries such as the United States and Russia, Russian wheat export prices fell for the second consecutive week last week. Consulting firm IKAR stated that as of November 15th, the FOB price of 12.5% protein new wheat from Russia delivered in December at Black Sea ports was $226 per ton, a decrease of $2 from a week ago.
Due to reduced wheat production this year and low domestic prices, Russian wheat farmers have suffered severe losses. Some farmers have stated that due to severe losses this year, they will reduce the wheat planting area and instead plant more profitable crops such as peas, beans, or sunflower seeds, which has made the outlook for wheat production in Russia uncertain next year. According to data from Rusagrotrans, the area of winter wheat currently being sown will decrease by 10% year-on-year, reaching the lowest level since 2019.
Due to strong wheat exports from Russia so far this year and a decrease in wheat production, it means that exports will gradually slow down in the coming months. The Russian government may issue grain export quotas from February to June next year in January. At present, most analysis institutions predict that the export quota may only be around 10 million tons, a decrease of nearly 70% from 29 million tons in 2024.
The wheat production in Australia's largest wheat producing state exceeded expectations and is expected to reach the third highest in history
The Grain Industry Association of Western Australia (GIAWA) stated that Western Australia will produce 10.33 million tons of wheat in 2024/25, which is about 1 million tons higher than the expectation in September when insufficient spring rain threatened crop growth. However, as the harvest unfolded, farmers reported higher yields than previously expected. Recently, several institutions have raised their wheat production expectations in Australia by 500000 to 1 million tons, as the production in New South Wales and Western Australia exceeded expectations.
The Australian Bureau of Agricultural Resources Economics and Sciences (ABARES) will release updated official production expectations in early December. The institution predicted in September that Australia's wheat production for 2024/25 would reach 31.8 million tons, a year-on-year increase of 23%.