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EU Wheat Steadies Ahead of Russia-Turkey Talks

European wheat edged lower on Friday on prospects of a revival of the Black Sea grain export deal that would further boost competition from the region but uncertainty about the Argentine harvest gave prices some support.

Benchmark December milling wheat on Paris-based Euronext, was down 0.3% by 1230 GMT to 233.75 euros ($254.16) a metric ton. It is heading for a weekly loss of more than 3%.

Russian President Vladimir Putin will hold talks with Turkish President Tayyip Erdogan on Monday in the Russian Black Sea resort of Sochi, the Kremlin said on Friday.

Two Turkish sources told Reuters on Thursday that the meeting would primarily discuss Black Sea grain exports.

“The restart of Ukrainian ocean shipping would have a significant impact on prices as Ukraine’s large volumes of exports via the EU have high transport costs,” a German trader said. “Ocean shipping would be much cheaper and so allow Ukraine to sell wheat more cheaply.”

Ukraine is exporting more wheat than last year despite the collapse in July of a safe-passage deal for grain ships.

Two more cargo vessels have left a port near Odesa, Ukraine’s deputy prime minister said on Friday – the third and fourth to transit from deep-water Ukrainian ports through the Black Sea since Russia withdrew from the deal.

This comes as Russia is already shipping massive amounts of cheap wheat on the international market.

Russia’s IKAR agriculture consultancy on Thursday raised its forecast for Russian wheat exports in 2023/24 to 49.5 million metric tons (mmt), 2 mmt more than it previously forecast, based on a revised estimate for the country’s wheat crop.

“The west EU is likely to play only a secondary role in world exports until the Russian crop starts to get sold out,” he said.

But some support is coming from reduced crop expectations in Argentina, another major competitor to EU wheat in export markets, traders said.

Argentina’s 2023/24 wheat crop has taken a hit as extreme weather batters much of the country’s agricultural areas, although expected rains next month will bring some relief, the Buenos Aires grains exchange said on Thursday.

On Thursday, European wheat fell to a seven-week low despite a first sale of French wheat to Egypt in more than a year as ample global supplies and a planned meeting between Russia and Turkey to discuss reopening the grain deal weighed on markets.

Benchmark December milling wheat on Paris-based Euronext, closed 0.7% lower at 236.75 euros ($256.54) a metric ton.

Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), said on Wednesday it bought 240,000 metric tons of wheat in an international tender.

“Egypt bought two cargoes of French wheat, which came as a good surprise, but the total was only 240,000 tonnes. That’s not that much in light of all the wheat available, especially in Russia,” a French trader said.

Almost 2.7 million tons of wheat were offered in the first round of the GASC tender. “I think this realization of huge supplies available is weighing on the market today,” a German trader said.

He also noted that “the French wheat was only sold because of the unofficial Russian government export price of $270 a ton FOB in the tender. In the less public market, Russian offers well below this level are still being made.”

Meanwhile, there was also surprise to see that unexpectedly the presidents of Turkey and Russia will meet to talk about restarting the safe shipping channel for Ukraine’s grain exports.

“Reopening the shipping channel would again be a bearish factor, bringing more wheat into world markets,” the trader added.

Updated quality results from the 2023 French soft wheat harvest showed the percentage of the crop meeting protein requirements for milling had dropped to 91% from 93%, but remained above a five-year average of 87%, farm office FranceAgriMer said.

In Germany after rain damaged the wheat harvest this summer, increasing volumes of low-quality German feed wheat was being offered in international markets, notably Denmark.

Source: Brecorder

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