On Wednesday, wheat prices hit a one-week low due to pressures of an extended Black Sea export deal and favorable US weather.
Wheat futures for May delivery decreased by -0.50% to $677.12 per metric ton on March 22’s Asian afternoon session.
According to experts, the weather in America is more accommodating for wheat. Also, the Black Sea deal, which allows shipments from Ukraine to Russian ports, was renewed on Saturday.
It is extended for 60 days, half of the intended period. This came after Moscow mentioned that any future extensions after May 18 would lessen Western sanctions.
Moreover, wheat prices from Russia plunged the previous week amid ongoing high supplies and lower prices from its top competitors.
On Monday, the US Department of Agriculture (USDA) rated 19.00% of grain in Kansas. It is a top producer in excellent growing condition, up from 17.00% last week.
On the other hand, unseasonal rains and hailstorms have damaged winter-planted crops such as wheat in India. It occurred in the country’s fertile northern, central, and western areas. The conditions exposed thousands of farmers to losses, increasing the risk of future food price inflations.
Furthermore, Punjab, Haryana, sectors of Uttar Pradesh and Madhya Pradesh were affected by severe rains. The areas are responsible for the majority of the output in India, flattening crops and drowning farms.
Shipment and Production Issues Drags Wheat
As the Russia-Ukraine war continued, wheat prices have steadily decreased in the past few months.
The grain has one of the worst market performances despite higher demand than supply. The plunge has been more aggressive after Russia and Ukraine had a deal on shipments from the latter country.
Another concern for wheat prices is the production in Kazakhstan, Brazil, and Australia is expected to rise this year. However, these countries should be able to ration the volume sold to other countries.
According to analysts, output prices have been declining since April last year. However, it remains below moving averages. Also, wheat has been lower than $701.00, the lowest point in January.