Wheat prices in the US have dropped to their lowest point in almost two years due to recent rainfall in the US plains, which has improved the outlook for crops. Despite the need for more rain in the central and southern plains, the recent wave of precipitation has left a bearish element in the market, according to commodities research firm Hightower. The most-active wheat contract on the Chicago Board of Trade fell by over 1% to $6.27 a bushel, after dipping last week to a low of $6.24, the weakest level since July 2021.
The recent rain in the drought-hit US plains and forecasts for more have eased concerns about hard red winter wheat production. This has led to a sign that more Ukrainian grain may hit the market, as the European Commission said last week it had reached a deal in principle to allow the transit of Ukrainian grain to resume through five EU countries that had imposed restrictions.
Egypt, one of the world’s top wheat importers, said on Saturday it was strongly considering approving the currencies of its commodity trading partners, including major wheat exporter Russia, to try to reduce the need for dollars. This could potentially lead to a shift in the global wheat market, as it would allow for more flexibility in trading and currency exchange.
In addition, a bumper Brazilian soybean crop is also expected to flow onto export markets, offsetting a drought-hit harvest in Argentina. This could lead to increased competition in the global market and potentially impact the prices of other crops, including wheat.
Large speculators increased their net short position in Chicago Board of Trade corn futures in the week, while non-commercial traders, including hedge funds, increased their net short position in wheat, according to the Commodity Futures Trading Commission’s weekly commitments of traders report. This could potentially lead to further drops in wheat prices in the coming weeks.
Despite the recent drop in wheat prices, there are still concerns about the overall supply and demand for wheat globally. The ongoing COVID-19 pandemic has disrupted supply chains and caused logistical issues for many countries, which has impacted the global wheat market. In addition, climate change and extreme weather patterns have led to droughts and other weather-related issues that have impacted crop yields in many parts of the world.
As the global population continues to grow, the demand for wheat and other crops is expected to increase. This could potentially lead to further price fluctuations and market volatility in the coming years. It is important for farmers, traders, and consumers to stay informed about the latest developments in the global wheat market and to be prepared for potential changes and challenges in the future.