Last week, the Black Sea market was down sharply again. 12.5% wheat prices in deep-sea ports dropped $21 to $253/mt. Traders continued to report extremely low demand, global benchmarks moved lower.
Wheat in Chicago and Paris lost more than 2% week on week. Both contracts broke 2021 support levels now.
The market continues to be focused on bearish news. Indeed, the crop outlook remains positive for the Northern hemisphere. Recent precipitation offset moisture deficit in the US, the EU and the Black Sea look good. Russian analyst IKAR upped Russia’s wheat crop from 78 mmt to 79.8 MMT, earlier in March SovEcon upped its forecast from 76.2 MMT to 79.3 MMT. IGC estimated 2021 global wheat crop at 790 MMT compared to 774 MMT in 2020.
Dryness in Brazil which is following delayed planting of the second corn crop and extremely tight global corn S&D seems to be forgotten for now.
Wheat demand from buyers remains extremely low.
12.5% wheat bids in deep-sea ports decreased to 14,300-14,700 rub/mt from 14,500-15,000 rub/mt (CPT). Wheat bids should drop further shortly to reflect FOB prices.
Domestic demand is relatively low, processors buy limited volumes or halt any buying again.
Farmers hope that export taxes will be revised / lifted later in the current year, i.e. after the September Parliament elections. Such scenario looks extremely optimistic to us.
Both ruble and FOB markets are expected to continue to move lower short-term. However, as global 20/21 grain S&D looks tight we still can see a substantial spike in prices, which could happen in April.
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