2024-03-19 23:01:32
Abundant global supplies continue to weigh on wheat prices, which have reached a three-and-a-half year low. The competition is still fierce between Black Sea origins and European origins. And this could last until the end of this cereal campaign.
Rough, fierce, relentless, there is no shortage of adjectives to describe the battle waged by wheat exporters on the market in recent weeks. Arthur Portier, consultant at Argus Media France describes a “ flight forward » of all origins which has led European wheat, listed on Euronext, to approach 190 euros per tonne – contract for delivery in May – to counter Russian wheat which has fallen below 200 dollars per tonne.
The driving force always remains Russia, it is she who has the “ power » on the wheat market: There is still a lot of grain in the country to load, to achieve the objective of 51 million tonnes of exports.
« With lower production costs, they can wage the price war » explains Arthur Portier, who specifies, however, that below 200 dollars per tonne, the margin of Russian farmers is reduced considerably.
To the abundant supply of Russiawe must add that of Ukraine which, despite the non-renewal of the cereal corridor, has managed to regain its place as a major exporter.
Also read: How Ukraine exports its cereals since the end of the agreement with Russia
Deliveries canceled by China
These fundamental market data are accompanied by news which in the short term contribute to maintaining prices at their current levels. This is the case of the cancellation and postponement of Chinese wheat purchases. The volumes concerned are not negligible: 500,000 tonnes of American wheat, ordered then canceled – according to the American government -, and around a million tonnes of Australian wheat, according to commercial sources cited by the Bloomberg agency, including the delivery would be partly delayed.
More ” Chinese dynamics remain good » specifies the Argus Media France consultant: in other words, if this apparent slowdown in Chinese demand is to be taken into account, it is not likely to redistribute the cards on the international market.
A balanced next campaign?
Barring any dramatic events, the market therefore has little chance of being disrupted between now and the end of the cereal campaign, on June 30, because what we call ” The fundamentals » i.e. supply and demand should not change significantly.
What is now focusing the attention of observers is the next campaign. It is still difficult to say what the balance will be between European areas of winter wheat which are expected to decline and Russian production which could once again reach the psychological threshold of 90 million tonnes. “ A poor performance in Europe will not necessarily herald a rise in prices »Already warns Arthur Portier.
Read also Fierce competition in the cereal market fuels low prices
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