The Mintec Benchmark Prices [MBP] for Wheat Milling 11% DDP Rouen FR [Mintec Code: WROF] was assessed at €224.00/mt, down €1.00/mt week-on-week (w-o-w) on the 25th of May. Wheat prices continued to be under pressure this week from managed money selling, grain corridor extension (for another 60 days) that eased supply concerns and continued wheat planting progress. Some market players believe that the sell-off has been greater than estimated as the market continues to underprice the risk to supply from potential weather-related factors. However, currently, there is almost no price-supporting news. Ample global wheat supply, together with high ending stocks in the EU and Russia, are pushing down the wheat complex.
On Tuesday, however, the market felt once again a bit of tension around the grain corridor deal. Mintec learned that Russia had not allowed vessels to enter Pivdennyi port (formerly known as Yuzhnyi), one of the Ukrainian ports involved in the grain corridor deal, creating some concerns in the market. A Mintec source added, “Russia continues to play its game; now they have found a new way to cut Ukraine exports by excluding the port that handles the most tonnages. They [the Russian government] are still going about their demands to be connected to the SWIFT payment system. Also, they want to resume the operations at the Togliatti-Odessa ammonia pipeline as part of a ‘grain deal’. But this all cannot happen until the war stops, so no one knows what their end game is.” Despite the grain corridor being extended, market players note that the export movement out of Ukraine indeed remains sluggish and that the vessel inspection time has not decreased.
In Russia, wheat exports continue at an excellent pace and market players believe that Russia will continue to sell and lead the wheat market. According to market analysts, Russia plans to harvest, on average, 130 million mt and export up to 55 million mt of grain a year, which will keep pressure on cash FOB/CIF prices. In Ukraine, prices were largely unchanged from last week. A continuation of the grain corridor deal gave a positive boost, although, according to market players, the grain corridor deal is more on the ‘paper’. In reality, vessel inspections are very slow and almost non-existent.