The world market is closely watching the US weather trying to figure out when rains will stop in the Midwest and how many acres of corn and beans farmers will plant. However, the weather is also becoming an issue in the Black Sea region. Despite models’ predictions second half of May was drier than normal in several important wheat Russian regions in the Volga Valley and part of the South (#1 export region).
As a result, Stavropol, Samara, Saratov, and Orenburg regions still experience a lack of moisture which is likely to lead to some decrease of 2019 winter wheat yields. After analysis of current conditions, we have lowered Russian wheat crop forecast from 83.4 MMT to 82.6 MMT because of expected smaller winter wheat production.
On top of that, models now predict dryness in the first part of June in almost all European Russia as well as Ukraine. Potentially lack of precipitation may last whole June. If this scenario turns to be true we are likely to see many downgrades of new wheat crop estimates from analysts who in recent months were constantly upping their Russian numbers. Ukraine’s estimates also could be lowered but to a smaller extent.
This would support prices for the new Black Sea wheat crop which is currently being traded around $195 (FOB, 12.5% prot.).