CHICAGO Board of Trade and Matif wheat prices remained subdued in March, amid strong Russian exports - with volumes 30 per cent higher year-on-year so far this season.
Strong Russian exports have negatively affected countries that are largely export markets, such as the United States and Australia.
The US has fulfilled only 85pc of the United States Department of Agriculture's (USDA) full-year target for export commitments, with only two months of the campaign remaining, with predicted stockpiles likely to be revised higher.
Producers in Russia, Australia and US are finishing the season with high stocks, which is adding pressure to global wheat markets, according to a recent Rabobank report, and they are predicting a rush to sell old crops before harvest pressure in the second half of 2023.
"Due to the supply situation it's no surprise funds are bearish, as highlighted by the latest US Commodity Futures Trading Commission data that shows Non-Commercials holding an 80,000 lot net short position, the shortest they have been since May 2019," the report said.
Uncertainty with Russia continues to weigh heavily on wheat markets, with rumours that Russia will limit exports providing a softer landing for prices.
The European Union (EU) is likely to carry over more wheat into the new season than USDA forecasts, due to a mild winter that prevented frost damage.
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"If so, the EU will struggle to export amid cheaper Russian wheat, which continues to dominate the export market," the Rabobank report said.
The Black Sea grain corridor agreement continues to be a heavy influence on markets, with the current 60-day renewal likely to provide some price support in the second quarter.
Russia is continuing to threaten to not renew the deal unless its demands, to remove some sanctions imposed by the West, are met.
"From a Russian point of view, this is the optimal time to finalise negotiations with the UN, amid the threat of global food insecurity," the Rabobank report said.
For vessel operators, the 60-day agreement creates potential issues.
Sluggish ship inspections by Russian officials are creating large backlogs of vessels in the Bosphorus Strait awaiting entry into Ukrainian ports - the lead time is reportedly around 90 days for some vessels.
"The short duration of the extension, coupled with the long inspection delays, make it difficult to see why vessel operators would risk sending new ships," the report said.
In May, when the 60 days are up, Ukrainian farmers will be ready to harvest a crop in the region of 16 million metric tonne.
Importers would expect to receive around 9mmt of that, with the bulk of exports typically taking place in the August to October window.
Jasmine Peart
Jasmine is a earnest listener and a passionate advocate for justice. She feels privileged to be trusted by farmers across Western Australia to tell their truth.
Jasmine is a earnest listener and a passionate advocate for justice. She feels privileged to be trusted by farmers across Western Australia to tell their truth.
