The price of European wheat is currently at such a level that it is interesting to ship to the other side of the Atlantic.
According to market agency Agritel, ships with European wheat are on their way from Poland and Germany to the United States. Sea freight costs have fallen, and a disappointing harvest is expected in the US. In addition, the exchange rate of the euro against the US dollar has weakened, making European exports cheaper on the world market.
It is reported that 210,000 tons of European wheat is on its way to the US. This stimulates wheat prices on the futures market in Paris. Wheat was also higher on US futures markets on May 23, mainly as funds sold some of their short positions.
The price level on the physical market is more than € 100 lower than at the beginning of this year. Earlier this week, European feed wheat was quoted even lower on the Rotterdam grain exchange at € 233 per ton (-€ 14). The price of EU feed wheat is back at the level of early August 2021-22. The question is to what level prices will fall. At the moment, the bottom does not seem to be in sight yet, the market is focusing on reports with a price-pressing effect as a result.
Traders note that Ukrainian grain exports through the port of Pivdennyi, located in the city of Yuzhne near Odessa, are being blocked by the Russians despite an extension of the grain deal. In addition, mainly good wheat harvests are expected in the northern hemisphere.
The expected Russian wheat harvest for 2023 has been increased by 1.2 million tons to 88 million tons by the Russian agricultural consultancy Sovecon. The harvest forecast has been increased compared to last month due to favourable weather in the south of Russia, which means that a larger yield is expected there. The yield remains below the level of the record harvest of 2022 (92 million tons of wheat) but is 7% above the 5-year average.
The Russian Ministry of Agriculture expects a wheat harvest of 78 million tons and the US Department of Agriculture (USDA) expects 81.5 million tons for the 2023 harvest. The increased supply, combined with weak US export demand, could put additional pressure on international wheat prices.