July 19, 2022

EU wheat prices up due to possible heatwave

Traders said concerns about potential damage to European maize crops from a severe heatwave, the failure to establish a grain export corridor in Ukraine, and strong export demand, have all contributed to a rise in European wheat prices on July 18, Reuters reported.

After reaching EUR 329 (~US$333.49; EUR 1 = US$1.01) euros earlier in the day, benchmark December wheat on the Paris-based Euronext exchange unofficially closed up EUR 5.50 (~US$5.58), or 1.7% higher, to EUR 322.25 (~US$326.65) a tonne.

Some of the increase in wheat prices was caused by worries that this week's hot temperatures and dry conditions in Europe might harm maize crops. A smaller maize crop could result in a rise in the demand for wheat for livestock feed.

Strong international demand after recent price drops and a lack of advancement in negotiations for the establishment of a secure shipping corridor for Ukraine's wheat exports also helped to support prices.

This week, Turkey said, a meeting between representatives of Russia, Ukraine, Turkey, and the UN to discuss restarting Ukraine's Black Sea grain exports was "probable."

Egypt's official grain buyer announced a tender to purchase wheat, excluding its usual sources in the Black Sea region and Europe.

Despite some traders' scepticism that a secure shipping route for Ukraine's grain exports will be agreed upon soon, export optimism persisted in Germany.

One German trader said there is a pretty high level of scepticism in the market that a shipping corridor will be agreed upon quickly, because mines need to be cleared and ports need repairs, so even if there is an agreement, it may be months before the first ships set sail.

Standard wheat with a 12% protein content was being sold for about EUR 22 (~US$22.30) more per tonne than the Euronext December contract in Hamburg.

-      Reuters