The Mintec Benchmark Prices [MBP] for Wheat Milling 11% DDP Rouen FR [Mintec Code: WROF] was assessed at €267.00/mt, up €5.00/mt week-on-week (w-o-w). Global wheat prices were under pressure again this week as optimism surrounding the Black Sea grain corridor extension grows. Also, competitive Russian offers, as well as a large Australian crop, has limited price gains.
On Monday 13th March 2023, Russia announced that it would support the extension of the grain corridor deal for 60 days instead of the original deal of 120 days and that it would like to see sufficient progress made in terms of facilitating the export of Russian agricultural products and fertilisers to international markets. At the time of writing (16th March) no deal has been signed and formally if there are no official objections from Russia before 18th March, the grain corridor deal should automatically extend for 120 days. A Mintec source commented, “not sure if the 60-day deal is sufficient, it is almost like no deal. With current logistical challenges and long queues for the inspections, in some cases more than 60 days, it would be impossible to get any forward deals done.”
In Ukraine, demand remained muted this week. A Mintec source commented, “the market is tight right now, we have very slow movement at the ports, buyers don’t want to risk it. In the seaports of Odesa, exports are down approximately 36% this week in comparison to last week. Everyone waits until there is some clarity on the grain corridor deal. Nearby, for example in Bulgaria or Poland, farmers are protesting against the cheap Ukrainian grain that has flooded their market and reduced the competitiveness of their own agri products, so not much demand from their side either.”
Russia continues to export wheat at a remarkable pace. A Mintec source noted, “33 million mt of wheat has already been sold, and some think Russia could export as much as 50 million mt this season. Just for March, the figure is expected to be 4.2 million mt which is double from last year. March exports will pick up, since now they have more favourable weather conditions for exports. I think demand will stay high and probably prices will be lowered to compete with the suppliers from other regions.”
In Europe, a new crop will be available in July, and the weather remains something to watch going forward. Currently, the dry weather continues in Spain and parts of Italy. In Germany, the second largest wheat producer in Europe, wheat production is expected to decline by 2.3% year-on-year (y-o-y) to 22 million tonnes. A Mintec source commented, “farmers have cut wheat planting for harvesting this summer because they had several years of summer heatwaves and droughts. This year they will increase winter rapeseed plantings by approximately 7-7.5% y-o-y to 1.16 million hectares.”