Wheat hits biggest weekly drop in 3 months on Black Sea supply hopes

BY Onome Amuge.

Wheat futures on the Chicago Board of Trade (CBOT) rose at the closing session of the week, but the market plunged to its steepest weekly decline since early April on renewed expectation over a deal to resume Ukraine’s stalled grain exports.

The most-active wheat contract Wv1 added 0.8 percent to $8.00-1/2 a bushel, but was down10.2 percent for the week, its biggest fall since early April.

Official reports showed that major global wheat exporters Ukraine and Russia have reached positive agreements in discussions which could lead to the resumption of Ukrainian Black Sea grain exports after Wednesday’s talks in Istanbul, Turkey.

Accordingly, Russia, Ukraine, Turkey and the United Nations are due to sign a deal in the coming week aimed at resuming Ukraine’s grain exports, Hulusi Akar, Turkish defence minister, disclosed to newsmen.

Strong demand for U.S. cargoes also underpinned wheat prices as exports of U.S. wheat in the week ended July 7 totalled more than one million tonnes, U.S. government data showed, reflecting the biggest weekly tally since March 2020 as prices were bearish enough to attract interest from global buyers.

Meanwhile, the U.S. Department of Agriculture (USDA) reported weekly sales of 1,017,156 tonnes of “old crop” wheat, harvested in 2022, and another 30,000 tonnes of “new crop” wheat to be harvested in 2023, for a total of 1,047,156 tonnes. That, according to analysts, was the most since the week ended March 19, 2020, when sales of old- and new-crop wheat reached 1,106,398 tonnes.

On the other hand, Consultancy Strategie Grains, during the week, cut all its forecasts for this year’s grain crops in the European Union as it fine-tuned wheat and barley estimates as harvest progresses in the bloc and pointing to dry weather threatening maize fields.

The EU wheat crop was expected at 123.3 million tonnes, down from 124.4 million projected in June and below the revised 129.9 million tonnes harvested in 2021, it said in a monthly report.

Conditions across most of Argentina’s vast farm lands are expected to remain mostly dry over the coming week, the Buenos Aires Grains Exchange said, while its peer in Rosario cut its estimate for the wheat crop by 4.3 percent due to drought affecting important agricultural provinces.

For other grain markets, corn and soybeans gained ground on forecasts of hot and dry weather in parts of the U.S. Midwest, but both markets ended the week in bearish territory.

“U.S. cask markets have weakened in line with the move in Chicago futures and this competition is adding pressure on European prices. Fundamentally, the situation has not changed much and supplies remain tight,” a market dealer said.

Corn Cv1 shed 2.6 percent for the week, while soybeans Sv1 lost more than 3 percent in the same period.