Rapidly declining US stocks and complicated planting conditions in the Northern Hemisphere are causing wheat prices to rally higher.
European wheat prices have surged this week, with a Euronext close contract which fell back to € 200 / t. This small surge was notably driven by US wheat after a quarterly inventory report that upset the market as a whole. The USDA has indeed announced US wheat reserves well below expectations.
All eyes are also on the upcoming campaign and the difficult weather conditions throughout the Northern Hemisphere. While France and the UK are currently suffering from worrying excess water, the Black Sea and the United States are suffering from lack of rainfall. The Ukrainian agriculture ministry has lowered its 2021 area target to 6.1 Mha, down 500 kha from last year.
In Argentina, drought is also still present and greatly degrades the country's production potential. The Buenos Aires Stock Exchange thus removed an additional point from its “good to excellent” ratings, for a total now estimated at only 8%, against 27% in 2019.
At the same time, demand is picking up a little color on the French market. Port activity has notably regained some dynamism with the return of Chinese buyers, while Breton cattle feed manufacturers are doing some business. The millers, on the other hand, withdrew from the market.