New crop Russian wheat prices are rising following global benchmarks. As of June 5, 12.5% wheat with July delivery is traded around $197/mt (FOB deep sea ports) which is around 9% higher than a month ago.
So far, the grain market has been supported by US weather problems and record slow planting of corn. As of June 2, only 67% of corn area have been planted compared to 96% on average. This supported wheat and corn prices both in Chicago and Paris as well as in the Black Sea ports.
However, the weather in the Black Sea region is becoming not so favorable for the new crop. We mentioned earlier remaining lack of moisture in parts of Volga and South (Stavropol), in addition to that during the next two weeks and potentially whole June the weather will remain drier than normal in almost all wheat regions of Ukraine in Russia.
This is likely to lead to downgrades of the new wheat crop estimates in Russia and to a lesser extent in Ukraine. Under this scenario we expect the Black Sea market to try to penetrate $200/MT level and also encourage more buying from large importing countries which demand is weaker at the moment compared to last year.
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