News

Wheat prices are likely to be confined to a narrow range in the coming days as the government has huge inventory of the food grain in its central pool. The government had 40.9 mln tn of wheat inventory in its central pool as on Aug 1, higher from 30.1 mln tn on the same day last year. The government has also raised its estimate for wheat output in 2017-18 (Jul-Jun) to a record high 99.70 mln tn from 98.61 mln tn earlier.

European wheat rose on concerns about availability on the world market with lower than expected supplies in the European Union and Canada and uncertainty on export policies in the Black Sea region. Benchmark December milling wheat on Paris-based Euronext, settled up 1.9 percent at 205.50 euros a tonne. European wheat gained 2.75 euros this week and 1.25 euros over the whole month of August which was marked by volatility with prices moving in a 198.00 to 219.25 euro a tonne range. The low euro against the dollar which remains below the $1.17 resistance is also supportive for European wheat, making it more competitive on the world markets.

The European Commission slashed its monthly forecast of common wheat exports from the European Union in the 2018/2019 season, due partly to a cut in its output estimate, in a further sign of tight world wheat supplies. In supply and demand forecasts released, the Commission pegged EU common wheat exports this season at 20.0 million tonnes, down from 25.5 million estimated in July and now below the 21.3 million shipped last season. The Commission cut its estimate of EU common wheat output to 128.8 million tonnes from the 133.5 million estimated in July and 142.0 million harvested last year. European wheat crops have suffered from hot and dry weather this season, particularly in the northern part of the bloc, with Germany losing nearly 20 percent of its crop.

Russian wheat exports between the start of the season on July 1and August 29 were 8.17 million mt, up 60% on the year. Higher-than-usual temperatures and dry weather over May-June resulted in an earlier-than-usual harvest and exports. Meanwhile, this weather also hit production. Rain during the harvest, especially in central regions reduced the quality. Russian wheat production for this marketing year is expected to be about 68 million-70 million mt, down from a record high of 85 million mt last marketing year. Wheat production is also expected to be lower in other producing regions, notably the EU, Canada and Australia, supporting wheat prices and incentivizing producers to take advantage by exporting. Deep sea port 12.5% protein wheat prompt loading was assessed at $225/mt Friday compared with $180.50/mt a year earlier, but $1.75 lower on the week and off the 42-month high of $234.50/mt hit on August 8.