For the Quarter Ending September 2023
North America
Throughout the third quarter of 2023, wheat prices experienced a significant decline in the North American region, particularly in Canada. This downward trend was mainly due to favourable growing conditions and a productive harvesting season in Canada during July. The abundant supplies of major field crops led to a substantial increase in exports and a significant rise in domestic stockpiles. While the ending-year inventories of major field crops are expected to see a slight increase, they are not considered burdensome. Furthermore, Canada faced persistently high temperatures and inadequate soil moisture levels, raising concerns about the quality and export potential of its fresh wheat crop. Consequently, wheat purchasing activity significantly decreased, limiting opportunities to fill the export gap. Market liquidity remained low due to ongoing volatility, making price discovery a challenge as trade participants remained disengaged. Additionally, inflation remained unchanged in September, but economists predict a gradual easing of price pressures in the coming months. The consumer price index increased by 3.7% compared to the same period last year, according to the U.S. Bureau of Labor Statistics. Factors such as competitive logistics and reduced demand from key trading partners contributed to the continuous decline in wheat prices and exports for the month. Additionally, abundant starting stocks in major corn-growing regions resulted in a surplus in the domestic market. with this the cost of Wheat in Canada as September2023 concludes settled at USD 252.
Asia Pacific
Across the APAC region, that too in Indian market the prices of Wheat demonstrate a mixed market Sentiments throughout the entire third quarter of 2023. The prices experienced a decline in the first half of Q3, improved in August, and then plunged again as September began. In July, wheat prices dropped significantly. The demand for wheat was affected by the ongoing heatwave in India, which led to power outages, water shortages, and disruptions in businesses and transportation. This situation resulted in a reduction in disposable income, lowering the demand for wheat-based products. However, demand from downstream food and feed industries remained moderate, balancing overall supplies among Indian merchants. To counter the impact of the heatwave and reduce food inflation ahead of upcoming elections, India initiated discussions with Russia to import wheat at a discounted rate compared to rising global prices. In August, wheat prices increased by approximately 2%. Despite sufficient wheat supply in the nation, attempts by some individuals to create an artificial shortage kept wheat prices relatively high in mid-Q3. By September 2023, the Indian market witnessed a significant drop in demand within the agricultural grains industry. Participants strategically focused on reducing their wheat stockpiles by destocking at lower prices than anticipated. Additionally, favourable weather conditions led to higher product availability, fuelling increased inventory levels among local manufacturers and retailers for the month.
Europe
Throughout the third quarter, the European wheat market experienced a fluctuating trajectory. The withdrawal of Russia from the Black Sea Grain Agreement significantly impacted wheat prices, given that Russia and Ukraine are major global suppliers of wheat and sunflower oil. This move escalated inflationary risks, as these countries' withdrawal disrupted supply chains and increased commodity prices. In many developing nations, local food prices rose due to weakened currencies against the dollar, affecting grain and vegetable oil purchases. Furthermore, In July 2023, Russia's inflation rate reached 3.3%, driven by the ongoing Russia-Ukraine conflict, which disrupted supply chains and raised commodity prices. The rubble’s depreciation made imports costlier for businesses and increased wheat prices for foreign buyers, making it challenging for farmers, traders, and consumers. With Russia's departure from the agreement, the scarcity of ships and Western traders' eagerness to engage with Moscow raised transportation costs for Russian wheat, especially as the Ukraine conflict threatened vital Black Sea supply routes. As September began, the downstream demand for wheat decreased, further weakening purchasing sentiments. The high inflation rate posed a significant challenge to the Russian economy, reducing consumers' purchasing power and hindering business operations. Pressure mounted on the Russian government to address inflation, although available options remained unclear. Traders speculated that Russia's surplus supply this year would maintain low wheat prices amid rising costs of other agricultural commodities, including sunflower oil. Concerns about declining yields in major wheat-producing nations were partially offset by Russia's surplus, contributing to market stability.
For the Quarter Ending June 2023
North America
Across the North American region, the prices of Wheat demonstrate a mixed market trend throughout the second quarter of 2023. The prices of Wheat in Canada improved slightly with the start of April, which was a result of a slight increase in domestic inquiries successfully catered by available stockpiles among the local merchants. However, mid of the second quarter again witnessed a significant dip in the prices of Wheat because of a decline in manufacturing activities supported by weakened Raw material prices purchased by manufacturers to produce various products, including Wheat. Moreover, as per May’s trend, the prices for energy and petroleum products fell for a fourth consecutive month in May 2023, leading to the monthly decrease in the IPPI (Industrial Product Price Index). Apart from that, as traders assessed a mixed weather outlook and tepid export demand, the prices for Wheat remained low throughout May with the settlement of USD 324/MT FOB Vancouver in Canada. Furthermore, towards the termination of Q2, the prices of Wheat started to rise, balancing the overall supply-demand market.
Asia Pacific
Wheat in the APAC region, primarily in the Indian market, demonstrated a decremented trend during the second quarter of 2023. At the start of the second quarter, the prices of Wheat continued to mimic the market trajectory of the previous month. One of the primary reasons behind the price decline includes excessive rainfall at the end of March and early April, when the wheat crop enters the vital grain-filling stage and gets ready for harvesting in April. This unseasonal rainfall has affected manufacturing activities, and the farmers focused on including manual labor to retrieve the production, owing to which the production capacity has reduced considerably. Moving towards the mid of the second quarter also, the prices of Wheat continued to remain on the south side. With this, the prices of Wheat across the Indian market were recorded at USD 281.97/MT Ex Bareilly in May. Besides this, the rupee has depreciated against the dollar in recent months, making imported goods more expensive. However, it also makes Indian exports more competitive in other countries, which additionally helped to boost exports and put downward pressure on prices.
Europe
Throughout the European region, the prices of Wheat followed a downward price trajectory during the second quarter. The operating rate continued to be witnessed a pessimistic trend even in April, and the demand for the wheat market was even weaker than the previous month. In addition, trade subjects continued to be bearish on the future market. Moreover, after Ukraine and Russia agreed to extend their deal and allow the export of grain from Ukraine Ports in the Black Sea, the prices of Wheat were reduced further in May. Energy markets and crude oil futures sagged, adding to bearish sentiments in grains. With this, the prices for Wheat in Russia were recorded at USD 253/MT FOB Novorossiysk and USD 213/MT FOB Odesa in Ukraine in the mid of the second quarter. Furthermore, the prices of Wheat in Russia and Ukraine continued to maintain their downward trend as a result of weak domestic inquiries successfully catered by available stockpiles among the local merchants until the end of June 2023.
Over the first quarter of 2023, there were fluctuations in the price of Wheat in North America, and the first month of the quarter saw a fall in prices. Because of the lack of demand and easy access to supplies in the domestic market, Wheat prices have been continuously declining. A decrease in prices is seen in the second month of Q1 as a result of favorable weather in the Northern Hemisphere. The oil and gas industries need for shale gas was also sufficient. In the final month of the quarter, there were enough inventories, and the weather returned to normal, which helped the forecast for output. This has exacerbated the price drop of Wheat in North America. Towards the end of Q1 2023, the price of Wheat was recorded to be USD 340/MT for FOB Chicago (USA) in March 2023.
Wheat prices in the Asia-Pacific area fluctuated in the first quarter of 2023 as a result of concerns about the state of the crops in several significant exporting countries. The price climbed in the first half of Q1 as a result of high demand, an imbalance in supply and demand, and the war's detrimental consequences on Ukraine's manufacturing prospects. India also produces a significant portion of the world's food grains, which are impacted by heavy rains, low productivity, and high demand from the end-use industries. As a result of heavy rains and low yields in India, the domestic market saw lower production in the second month of the second half of Q1. The price of Wheat was estimated to be USD 269.53/MT for Ex-Indore in March 2023.
The first quarter of 2023 saw fluctuations in Wheat prices in Europe, helped by a price increase in the first month of the quarter because of a rise in demand. Grain shipments from Ukraine were restarted in the first half of Q1 in an effort to maintain a global downturn. As a result, food and fertilizer were made available. Due to the abundance of inventories on the domestic market later in Q1's second half, the price was continually declining in line with the product's pricing. Wheat prices rose in the last month of the quarter in the domestic European market as a result of a poor yield, a little rise in crop production and harvesting area, and the impact of the conflict in the region. Towards the end of Q1 2023, the price of Wheat was recorded to be USD 282/MT for FOB Novorossiysk Russia in March 2023.
