Wheat: Black Sea prices mixed despite strong demand

Russia's wheat prices shrugged off support from fresh demand, in contrast to higher offers heard for European product.

Russia's spot 12.5pc protein content wheat contract closed at $390/t fob Novorossiysk on Tuesday, unchanged from the previous trading session. The country was still on public holiday on Tuesday which limited trading liquidity, market participants said.

On the European side, offers for spot 11.5pc wheat contracts on a fob Constanta/Varna/Burgas basis were heard at some $420/t on Tuesday, compared with $410/t last week, while offers for the corresponding 12.5pc wheat contract were heard around $430/t. Gains were driven by Algeria's announcement of a new milling wheat tender for 50,000t of product for shipment in June-July, closing on 11 May. The tender comes after weak trading interest in old-crop product last week and despite muted market activity ahead of the US Department of Agriculture's (USDA) World Agricultural Supply and Demand Estimates (Wasde) report, which is scheduled to be released on Thursday.

On the new-crop side, 11.5pc wheat on a CVB basis was heard offered at €4/t premium over the Euronext milling wheat September futures contract for shipment in August, in line with premium levels heard last Friday.

Meanwhile, French grain exports to the EU-27 hit a multi-year high in March, amid disruptions to Ukrainian shipments and weak competitiveness of French product in the global markets.

In contrast, the EU-27's cumulative wheat exports neared a marketing-year low in the week ending 8 May, while corn imports rose to their highest in two months on firming Spanish demand.

Elsewhere, Argentina's spot 11.5pc wheat contract fell by $7.50/t to close at $428/t fob upriver. The corresponding 12pc wheat contract settled at $430/t. Losses were driven by dwindling demand, with sellers lowering offers, as Argentinian product continued to be competitive mostly in South America — mainly Brazil.

On the global futures markets, the Chicago Board of Trade (CBOT) SRW wheat futures turned to gains along the curve on Tuesday. The July contract was up by ¢5.4/bu to ¢1098.2/bu at the time of writing. Gains were made despite improving US winter wheat crop conditions, with the share of "good-to-excellent" crops up by two percentage points on the week to 29pc. That said, crop ratings are still down considerably from a year ago when 49pc was rated "good-to-excellent".

Meanwhile, Bangladesh issued a new tender for 50,000t of 11.5pc milling wheat for shipment within 40 days of contract signing, closing on 23 May. The country is likely to seek Indian origin wheat, according to market participants.

But India's export prospects appear limited for the remainder of the 2022-23 marketing year (April-March). The country has already sold at least 5mn t of product since the start of the season, while domestic consumption is forecast 100mn t, according to Argus' analytics and advisory arm Agritel. If India stops export sales, it will be able to avoid needing imports if output reaches at least 95mn t. That said, India's government has not announced any plans for export restrictions, and sales have continued, according to market participants. And unfavourable weather conditions in India could ease, with rain forecast to improve in June — but this might be too late to prevent production losses.

Canada

Prices extended gains on rising futures, while Japan returned to the market after a multi-week break.

The Canadian Western Red Spring (CWRS) 13.5pc spot wheat contract rose by $1/t to close at $481.50/t fob Vancouver on Tuesday. Premiums were steady, with gains reflecting higher Minneapolis Grain Exchange (MGEX) futures. The July contract was up by ¢4.2/bu to ¢1211/bu at the time of writing.

And old-crop premiums could see support in the coming days from fresh demand from Japan. The country issued a new tender on Tuesday for a total of 196,560t of milling wheat of US, Canadian and Australian origin, including 85,580t of 13.5pc CWRS. The shipment period for US and Canadian wheat is July, and September for Australian product.