EU Wheat Prices Drop from Three-Week High Following Chicago Trends
- 20-Sep-2023 7:46 PM
- Journalist: Nicholas Seifield
The most actively traded wheat on the Chicago Board of Trade (CBOT) faced a setback, with a notable decline of 2.1%, causing it to settle at $5.91-3/4 per bushel. The primary concern in the wheat market revolved around the lackluster export demand for U.S. wheat supplies.
Interestingly, European Union (EU) wheat prices had been on an upward trajectory, reaching a three-week high during the previous week. This bullish trend was fueled by early indications of renewed export demand, including notable interest from China. The confirmation of these sales came to light on the following Monday, as reports emerged suggesting that China had made substantial purchases, potentially acquiring up to 600,000 tonnes of French wheat in their first seasonal procurement. Additionally, Algeria entered the picture by initiating a tender on the same Monday for the purchase of both wheat and barley. Market participants eagerly anticipated the results of this tender, with the outcome expected to be disclosed later in the week.
A significant point of contention emerged on Monday in the realm of agricultural trade, creating a rift between Ukraine and some of its closest allies within the European Union. This discord unfolded after three EU member states unilaterally imposed restrictions on imports originating from Ukraine. Poland, Slovakia, and Hungary jointly announced these import restrictions on a Friday, a decision precipitated by the European Commission's choice not to extend a ban on sales within Ukraine's five EU neighboring countries. This group of nations also includes Romania and Bulgaria.
The ongoing heatwave that has gripped Australia has raised concerns within the agricultural sector, with operators and experts keenly monitoring its potential impact on Australian crops. The uncertainty surrounding this climatic event has prompted stakeholders to await more comprehensive assessments regarding its effects.
Turning to the maize sector, the European Union's crop monitoring service, known as MARS, delivered a revised forecast for this year's EU average yield, and the update carried a 3% downward adjustment. This revision was primarily driven by a worsened outlook for summer crops in Romania, Bulgaria, and Greece, which led to reduced expectations for maize yields in these countries.
The wheat market experienced a setback on the CBOT, primarily due to underwhelming export demand for U.S. wheat. In contrast, EU wheat prices saw a recent upswing, buoyed by signs of renewed export demand, including interest from China and Algeria's entry into the market. A contentious agricultural trade dispute emerged between Ukraine and some EU member states, causing a division within the EU. The ongoing heatwave in Australia has created uncertainty about its impact on crops, while the maize sector in the EU saw a downward revision in yield expectations, primarily due to challenges in Romania, Bulgaria, and Greece.