Black Sea wheat moved lower again but global benchmarks are on the rise

12.5% wheat prices in Russian deep-sea ports dropped $4 to $244/mt. The market was under pressure of weak demand which can increase short-term thanks to higher global benchmarks.

Last week, 12.5% wheat prices in Russian deep-sea ports dropped $4 to $244/mt. 12.5% wheat prices in shallow ports decreased by $6 to $236/mt. The market was still under pressure of weak demand which can increase short-term thanks to higher global benchmarks.

Wheat in Chicago and Paris closed the week sharply higher. SRW settled at $6.4 ($235/mt; +4.7% WOW), French milling wheat at E213/mt ($253/mt; +1.8% WOW). Chicago corn gained 4.5%. Friday WASDE was friendly for bulls with US corn stocks below expectations.

Chicago Corn and wheat charts look friendly for bulls. Wheat returned into 6.3-6.6 range and broke above 100MA, corn broke above $5.6 resistance after long consolidation and almost touched $6 on Friday.
Brazil corn regions remain drier than normal. USDA left the country’s crop unchanged at 109 MMT, Argentina’s crop was cut by 0.5 MMT to 47 MMT.

In the US dryness in the Northern Plains becomes gradually an issue for spring wheat. France and Germany also have been drier than normal in recent weeks.

This is being partly offset by improving weather conditions around the Black Sea. There was plenty of rains in Ukraine and southern Russia during the recent weeks. Last week, SovEcon upped the Russian wheat crop forecast by 1.4 MMT to 80.7 MMT on further improvement of crop conditions in the South which account for around half of the total winter wheat area. Today Russian analysts IKAR upped the crop forecast to 81 MMT.

Looks like rising wheat prices are waking up buyers. In recent weeks Algeria, Ethiopia, Saudi Arabia and Egypt announced and held new tenders.

12.5% wheat bids in deep-sea ports remained mostly unchanged at 14,200-14,500 rub/mt (+50 rub/mt WOW). Wheat bids in shallow ports decreased to 13,000-13,700 rub/mt from 13,100-13,900 rub/mt. Farmers continue to gradually lower offers but bid/ask spreads remain high all over the country.

In line with our expectations the global wheat market is moving higher, Russian FOB is expected to follow shortly.

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