In W38 in the wheat landscape, wheat purchasing prices in Russian ports continued to decline despite the stabilization of the dollar exchange rate and export duties. This downward trend was primarily attributed to the free-on-board (FOB) price declines, ranging from USD 2 to 4 per metric ton (mt) during the week. However, the real market downward pressure resulted from wheat oversupply among farmers across all macro-regions in Russia. The wheat surplus accumulates as demand reduces seasonally after active purchasing in Jul-23 and Aug-23, compounded by competitive supply from new crops in European countries and Ukraine. Experts indicate a low likelihood of wheat prices rebounding to fair parity levels over the next two to three weeks, especially in light of a moderately active lineup.
APK-Inform reported a notable increase in food wheat prices in Kazakhstan in W38. This price surge was attributed to a decrease in the wheat supply from farmers due to a slowdown in the harvesting activity caused by rainfall. Additionally, issues such as sprouted and wet grains impacted the harvested wheat quality. Demand prices for 3rd class food wheat ranged from USD 241.30/mt to USD 272.78/mt Ex Works (EXW) in W38, a surge ranging from USD 31.47 to USD 41.97 compared to W37. Many market participants are adopting a cautious stance, opting to wait until the end of the harvesting season and the establishment of price levels for the new crop by the Food Corporation.
The Argentine Ministry of Agriculture expects the wheat cultivation area to reach 5.6 million hectares (ha) in the 2023/24 season, a reduction of 0.2 million ha compared to the initial estimate and a 0.3 million ha decrease year-over-year (YoY). This downward adjustment is attributed to insufficient rainfall. Nonetheless, the Buenos Aires Grain Exchange indicated that 78% of Argentine wheat crops were in good or excellent condition as of September 20, a notable improvement from the 58% recorded in the same period in 2022.
The wheat market in Brazil remained on schedule in W38, with harvesting progressing well in the northern and western regions, reporting good crop productivity and grain quality. However, concerns arise for late-harvested crops in the southern region, particularly Rio Grande do Sul, due to heavy rains causing damage during flowering and early grain formation stages. This situation led to lodging in certain areas and flower drops. The overall cultivated area for the 2023 harvest is estimated at 1.51 million ha, with an expected productivity of 3,021 kilograms (kgs) per ha. The current weather conditions are conducive to disease development, particularly in ears and spikelets, raising the risk of quality loss in maturing grains and the potential for low prices in the feed market.
Lastly, StoneX expects further deterioration in Australia's wheat production prospects in 2023 due to the persistently hot and dry weather experienced in Sep-23, a critical period for crop development. StoneX estimates the Australian wheat harvest at 24 million metric tons (mmt) in 2023, a downward revision of 1 mmt compared to the Aug-23 estimate. Experts caution that another 100 thousand mt of wheat could be lost in Sep-23 if rainfall remains absent. Notably, Australia's national weather service confirmed the occurrence of the El Niño phenomenon, signifying the continuation of drought conditions.