Wheat Reaches Lowest Point in Three Months Due to Abundant Russian Stocks

Wheat prices in Chicago experienced a significant dip on Monday, marking the lowest point in over three months. This decline can be attributed to the substantial wheat supplies flowing from Russia, a prominent exporter in the global market, coupled with limited demand for U.S. wheat.

Meanwhile, corn and soybean prices witnessed an uptick as traders positioned themselves ahead of anticipated updates from the U.S. government. These updates are expected to include downward revisions in domestic crop forecasts.

At 1121 GMT, the most active wheat contract on the Chicago Board of Trade fell by 0.7% to reach $5.91-1/4 per bushel. It briefly touched $5.87-3/4, representing the lowest level observed since May 31 and slipping below the previous three-month lows recorded on Friday. Conversely, soybean prices rose by 0.2%, reaching $13.66-3/4 per bushel, while corn saw an increase of 0.3% to hit $4.85-1/4 per bushel.

The downward pressure on wheat prices can be attributed to several factors, with a key influence being the ample supply of wheat emanating from Russia, a leading player in the global wheat export market. Additionally, there has been a noticeable lack of demand for U.S. wheat, further exerting pressure on prices. This situation unfolds despite the ongoing uncertainty surrounding the reopening of a secure shipping channel for Ukraine's exports.

A German trader emphasized the prevalence of Russian wheat in global markets and mentioned that Russian wheat is being transported to international markets in substantial quantities, leading to Russia's dominance in the export sector. It is worth noting that Russian export supplies are so substantial, stemming from this year's crop, that Russia is poised to maintain its dominance in world markets for the foreseeable future, extending into 2023 and 2024.

Notably, Russian wheat prices are currently at a low point, trading below the unofficial minimum export prices set by the Russian government. The trader further remarked that the swift resumption of a secure shipping channel for Ukraine's exports is not expected at this juncture.

Over the weekend, the European Union criticized Russia for its withdrawal from the Black Sea grain deal. In response, Russia emphasized the need for its conditions to be met, and Turkey's president suggested that any initiative isolating Russia was likely to face challenges.

Looking ahead, the United States Department of Agriculture is scheduled to release its monthly World Agricultural Supply and Demand Estimates on September 12. Market participants are anticipating reductions in forecasts for U.S. corn and soybean harvests in these forthcoming updates.