The Mintec Benchmark Prices [MBP] for Wheat Milling 11% DDP Rouen FR was assessed at €290.00/mt, down €3.00/mt week-on-week (w-o-w). Competitive Black Sea supplies continue to limit international prices. A larger-than-expected Australian crop is also preventing sharp rallies in the wheat price. The wheat balance sheet appears tight but not enough to push global prices significantly higher, according to market participants.
Global agricultural demand continues to be slow, and there are no signs that Chinese demand is increasing in any significant way. A Mintec source noted, “the lockdown rules are easing, but now China has high COVID infection rates. The expectation of China's demand hitting the world export market is only increasing the total speculative long in the markets. WASDE USDA report also did not make any revisions to China figures in the latest report, so there is a question mark over Chinese demand. Maybe the picture will be somewhat clearer after local New Year.”
Competitive Black Sea wheat supplies continue to dominate the market. Despite the reduced insurance coverage for vessels sailing through the Black Sea and increased costs for Russian vessels, Russian wheat continues to win tenders due to competitive prices - Egypt GASC bought 120k mt, and Turkey TMO bought 565k mt of Russian wheat last week. The procurement was financed by the World Bank, as with the previous tender. Since July 2022, GASC has purchased 4.2 million mt of wheat, of which 2.6 million mt are Russian, representing 61%. In total, Egypt has contracted 5 million mt of Russian wheat this season, of which 4 million mt have already been delivered. The USDA left 2022/23 Russian wheat production and exports unchanged in the latest USDA report (published on 12th January), at 91 million mt and 43 million mt, respectively. A trader noted, “overall, the Russian domestic wheat market looks to be oversaturated. Rosstat and some other Russian statistics are quoting wheat production more between the 100 and 104 million mt range. There is a lot of speculation on the market about the actual size of the crop and export potential.”
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