Wheat Market Update - The Pressure Continues

Tuesday 20th August 2024

Welcome to this week’s market update! Each week, we'll delve into the market movements and key factors affecting wheat prices. Whether you're a fellow industry professional, a supplier, or simply interested in what’s happening in the market, our updates will offer valuable insights to keep you ahead of the curve.

Global Focus

Over the past ten days, wheat market prices have continued to decline. Despite recent Ukrainian advances into Russian territory, which could have spurred bullish sentiment, market movements remain subdued. Additionally, the International Grain Council has revised its global wheat production forecast down from 801 million tonnes to 799 million tonnes. While this might typically support prices, the market remains under pressure due to weak demand and growing crop expectations in the US.

Another key factor weighing on prices is the continued competitiveness of Black Sea wheat supplies, with Russian wheat prices falling further last week. On Wednesday evening, Russian missile strikes targeted port infrastructure in Odesa, raising concerns about Ukrainian grain shipments. However, reports suggest this incident is unlikely to escalate into a broader threat to exports, limiting any significant market impact.

In Western Europe, poor crop conditions persist, with variability being a notable feature across the region. Last week’s WASDE report had little effect on the market, as reductions in US and EU wheat production were offset by increases in projected yields from Ukraine and Australia.

UK Focus

The UK wheat harvest continues to progress well, with good specific weight samples, strong Hagberg values, but variable protein levels. According to the AHDB’s second harvest progress report, as of 14th August, 37% of the harvest is complete.

Meanwhile, London feed wheat futures for November 2024 edged 0.3% lower, dipping back below £185/t, though they remain above the five-month lows reached last week.

Summary

Global wheat prices have continued to fall despite bullish signals, with weak demand, rising US crop estimates, and competitive Black Sea supplies, especially from Russia, keeping markets under pressure.

Geopolitical tensions remain, with Russian missile strikes on Odesa raising concerns over Ukrainian grain exports, though the market impact has been limited as significant disruptions are not expected.

In the UK, the wheat harvest is progressing well with good quality results, and London feed wheat futures for November 2024 have dipped slightly, though they remain above recent lows.