Andrey Sizov
12.11.2024
During trading on November 11, the December SRW wheat contract on the Chicago Board of Trade dropped to $5.52/bush ($203/mt), marking the lowest level since September 3. Futures fell to a two-month low amid wet weather in the US and a strengthening dollar.
Over the weekend, Kansas received 20-40 mm of precipitation, offsetting the moisture deficit accumulated over recent months. Kansas is the biggest wheat producer in the US.
The strengthening US dollar also likely pressured prices. On Monday, the US dollar index closed at 105.5, up 0.5% from Friday, reaching its highest level since July 2024.
Russian exports continue to put pressure on global prices. SovEcon estimates Russian wheat exports in November at 3.7-4.1 million metric tons (mmt), up from 3.2 mmt a year earlier and a five-year average of 3.5 mmt.
Dry weather persists across much of Europe, with sowing in France approaching average pace. In southern Russia, recent rainfall has improved new wheat crop prospects.
Another source of pressure could be the potential easing of tensions in the Black Sea region. Western media reports that US President-elect Donald Trump called the Russian President to resolve the conflict in Ukraine, although the Kremlin denied the call.
Improved new wheat crop prospects, along with reports of negotiations between Russia and Ukraine, may pressure prices in the near term. Additionally, considering current global stocks and their ratio to global consumption, we view current wheat prices as fundamentally low. We also believe the market may be overestimating the prospects for Russian exports this season.
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