Mid-week wheat market roundup: Grain market daily

• Following the trend of both US and EU markets, UK feed wheat futures lost ground yesterday – see more details below. The May-23 contract closed at £277.20/t yesterday, down £2.35/t from Mondays close. Over the same period, the Nov-23 contract lost £2.00/t, to settle at £260.00/t.
• Paris rapeseed futures (May-23) closed at €638.75/t, down €8.00/t from Mondays close. Rapeseed markets followed movements in soyabean prices, which were pressured by concerns around Chinese demand.

Domestic and global wheat markets have been under pressure so far this week by cheap Russian exports, optimism that the Ukraine grain corridor will be extended, as well as positioning ahead of today’s USDA World Agricultural Supply and Demand Estimates (WASDE) release.  

Cheap Russian wheat exports

As has been well reported, Russia have had a bumper wheat harvest this season. According to the Russian Ministry of Agriculture, wheat production in 2022 was forecast at a record 105Mt. With a substantial exportable surplus, Russian wheat has been pricing very competitively on the export market. Yesterday, Algeria’s state grain agency OAIC, bought c.480Kt of wheat on an international tender. While the origin of the wheat is yet to be confirmed, it is thought that a large proportion of it is Russian (Refinitiv). The news that Russian wheat was pricing competitively for the Algerian tender weighed on European markets yesterday. This also followed a wheat tender on Monday by Egypt’s state buyer GASC. Russian origin looked to be the most competitively priced, but the tender was later cancelled.

Given the size of its crop, it is likely that Russia will continue to be ‘aggressive’ with its export campaign this season. However, according to SovEcon, Russian wheat exports could be capped by a strong ruble and subsequent export duty, along with a lack of rail wagons causing backlogs. It will likely also be a bargaining piece with the UN looking to renew the Ukrainian export corridor.

Ukraine grain corridor

The Ukraine grain corridor deal is set to expire in a matter of days. After withdrawing from the deal at the end of last month, Russia then said they would re-join the deal last week. This has renewed optimism that the deal will be extended past 19 November when it is set to expire.  Yesterday, Ukrainian President Zelenskiy, told the US Ambassador to the UN that the deal must be extended. Furthermore, according to Refinitiv, Kyiv wants the export deal to be expanded to include more products and ports.

While there is optimism that the Black Sea trade deal will be extended past the end-November, some are still wary that this may not happen, with Russia remaining critical of the corridor. Eyes remain on the G20 meeting next week in Indonesia, as world leaders gather.

WASDE positioning

At 5pm GMT today, the USDA will publish its latest World Agricultural Supply and Demand Estimates (WASDE), with traders and markets currently positioning ahead of its release. According to a Refinitiv pre-report poll, analysts are expecting US maize yields to remain unchanged, but US maize and wheat closing stocks to be revised higher, which has added some pressure to markets. If the actual release differs from expectations, then it’s likely that markets would react accordingly.

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