World Grain - August 2020 - 16

GRAINMARKET REVIEW

WHEAT

Monthly wheat prices
(US dollars per tonne)

250
200

Ample supply pressures prices

150

by Chris Lyddon

100

0
Jun 20

May 20

Apr 20

Mar 20

Feb 20

Jan 20

16

50

Dec 19

World market wheat prices have trended lower in recent months,
despite reduced production forecasts for some important producing areas, on the expectation of ample supplies in the new marketing year.
In its Grain: World Markets and Trade report, published July
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of Agriculture reported price declines for most major exporting
countries during June, mainly because of seasonal pressure ahead
of a forecast record world harvest.
"Russia was pressured lower as harvest approaches with relatively favorable conditions to date," it said. "EU prices declined
despite some lingering concerns over dryness in some Member
States. Canada's prices also declined on seasonal pressure and
expectations for a large crop. US prices moved lower as well with
the US winter wheat harvest now more than halfway complete."
The FAS described Australian prices as having "plummeted
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higher on seasonally tightening supplies. Prices rebounded in
recent days with expectations of smaller crops in the European
Union and Russia."
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6HUYLFH(56RIWKH86'$VDLGQRWDEOHUHGXFWLRQVLQWKHXScoming wheat crops in the EU and United Kingdom, Russia (but
only for winter wheat), Morocco, Mexico and the United States
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"Wheat production for the EU fell further this month, down
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The forecast wheat area was unchanged from the previous
month, but yields were reduced by a further 1% compared with
the earlier forecast.
"Conditions for the EU wheat crop have been described as both
variable and challenging," the ERS said. "At the outset of the fall
planting season, excessive rainfall delayed and, in some cases,
prevented planting - mostly in northwestern Europe. The wet
fall was followed by the second warmest winter on record, which
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during much of the growing season accelerated the maturation of
the 2020-21 EU wheat crop. Considering the wheat crop's rela-

Wheat (US), No. 1, hard red winter, ordinary protein, export price
delivered at the US Gulf port for prompt or 30 days shipment.
Source: US Department of Agriculture, World Bank

tively advanced maturity, June rains are expected to have had a
minimally positive impact on the wheat harvest."
Winter wheat production in Russia is lowered 1 million tonnes
in July to 56 million while spring wheat is increased 500,000
tonnes to 20.5 million, the ERS said, adding that net Russian production is lowered 500,000 tonnes to 76.5 million.
The International Grains Council (IGC) said in its Grain Market Report at the end of June that world wheat prices were mostO\ORZHUDOWKRXJKDGURSLQLWVZKHDWVXELQGH[UHÀHFWHGD
change to new crop quotations in some regions.
"While uncertainty about production prospects in Europe and
the Black Sea region continued to provide price underpinning,
any upward moves were contained by expectations for overall
world supplies to be ample in the year ahead," the IGC said.
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for European and Black Sea crops, with some analysts believing
the precipitation came too late for certain areas to reverse earlier
damage from dryness. In general, forecasts for European production continued to come down during the month, which provided
price support to world prices, but some expectations for the harvest in Russia moved higher."
The London-based IGC also noted that uncertainty over the
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something that was exacerbated by a resurgence of the virus in
some countries where lockdowns were being eased.
"Generally subdued new-crop import buying interest underscored the uncertain demand outlook and contributed to the soft
price tone, but there were signs of improved import buying interest as the month progressed," the IGC said.
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
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August 2020 / World Grain / www.World-Grain.com
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World Grain - August 2020

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