In W26 in the wheat landscape, the United States Department of Agriculture (USDA) indicates that 40% of US winter wheat was rated good to excellent, 2% higher, with 97% headed, in line with the usual pace, while harvesting reached 24%, down compared to 33% on average. Meanwhile, 50% of US spring wheat was classified as good to excellent, down 1%, with 31% headed, up compared to 25% typically in late June. The USDA also reports that in the week ending June 22, US wheat export inspections amounted to 203.72 thousand mt, down 31.45 thousand mt WoW and 149.17 thousand mt YoY, with shipments mainly destined for Yemen and Japan. Early in the 2023/24 season, US wheat inspections amounted to 757.35 thousand mt, down compared to 1.34 mmt in the same period in 2022/23. In W26, the Brazilian wheat market experienced limited activity, with cautious agents studying the best course of action during the off-season. Wheat prices indicated a halted downward trend but remained under pressure due to factors such as the favorable development of the current wheat crop, the weakening of the US Dollar, and global market weaknesses. Well-supplied mills did not have an immediate need for acquisitions, giving them an advantage, while producers were increasing orders in the domestic market despite limited flexibility to negotiate lower prices. The presence of global and regional buyers in the Rio Grande do Sul market provided sellers with confidence. Looking ahead to the new wheat crop, if production potential and quality are maintained, prices are expected to stabilize or even slightly decrease. As of June 20, planting progress in Brazil's main wheat-producing states reached 60% of the area, a slight WoW increase. In Paraná, planting reached 83% by June 20, with minimal advancement due to recent rains. Climate conditions have generally been favorable for development. In Rio Grande do Sul, wheat planting reached 55% of the area by June 22, slightly behind 2022's progress but in line with the five-year average for the same period.
In Russia, wheat prices surged to a four-month high amid concerns over grain supplies to the global market, with prices rising by 29% in May-23, the largest increase since 2015. Uncertainty surrounding the events related to PMC Wagner in Russia added to concerns about Russian grain supply prospects. Dry weather conditions also contributed to increased demand for wheat as it negatively affected the harvest of corn and soybeans in the US. Russia is expected to be the world's largest wheat exporter, and any changes in its supply will significantly impact the global market. The Russian shipping industry is assessing transportation safety in the region, but no immediate disruption to wheat trade has been observed. The situation could raise concerns about extending grain deal, allowing Ukraine to ship grain from Black Sea ports. The political turmoil in Russia makes it less likely for the deal to be extended, potentially leading to further price increases. The grain deal, established with Turkey and the United Nations (UN), guarantees the safe export of Ukrainian grain and the removal of restrictions on Russian agricultural products and fertilizers in the world market. Moscow expressed dissatisfaction with the implementation of the second part of the agreement and has set July 18 as the deadline for completing all unfulfilled agreements. The USDA expects Ukraine’s wheat production in the 2023/24 season to reach 17.5 million metric tonnes (mmt), a decrease of nearly 50% compared to the 2021/22 harvest of 33 mmt, the lowest level in 12 years. The USDA also expects 2023/24 Ukrainian wheat exports to reach 10.5 mmt, an 11-year low, down from an estimated 16 mmt in 2022/23 and below the record of 18.8 mmt in 2021/22. However, the projections for 2023/24 could be even lower if Russia decides not to renew the Black Sea Grain Initiative, a deal that has facilitated Ukraine's grain exports since Jul-22. Ukrainian experts believe Russia will not renew the deal, as it is developing an alternative for its ammonia exports. The agreement, brokered by the UN and Turkey, is believed to have played a crucial role in stabilizing grain commodity markets. Ukraine also exports grain through its small ports on the Danube River and its western border with the European Union (EU). Russia threatened not to extend the deal beyond July 18 unless certain demands, including the removal of obstacles to Russian grain and fertilizer exports, are met. The Black Sea export deal also covers the safe export of Russian ammonia, which is essential for nitrate-based fertilizers, but no ammonia shipments were made under this initiative.
Lastly, India's Food Corporation of India (FCI) indicates that the Indian government may reduce the 40% import duty on wheat if necessary, in response to concerns about inflation and rising retail prices. Retail prices of wheat and rice have increased, prompting the government to explore interventions such as import duty reduction. The average retail price of wheat rose by nearly 1% to USD 0.36/kg in one month. The price surge is attributed to a likely decrease in wheat production, with industry estimates suggesting a 10% lower harvest than the government's projection due to factors like El Niño affecting monsoon rainfall. The Indian government is expected to conduct open market sales operations (OMSS) of wheat and rice to address rising prices. The first e-auction will offer 400 thousand mt of wheat and 500 thousand mt of rice. The government currently holds stocks of 8.7 million mmt of wheat and 29.2 mt of rice for market interventions and other purposes. The OMSS for wheat is anticipated to begin with a base price of USD 26.21/quintal for fair average quality wheat. The bidding process is restricted to domestic buyers to ensure wider domestic reach for the stocks.
