PARIS: Euronext wheat rebounded on Friday from a three-week low in the previous session after a Ukrainian attack on a Russian port zone underscored war risks to Black Sea exports.
September wheat on the Paris-based Euronext exchange was 1.7% higher at 236.00 euros ($260.52) a metric ton by 1548 GMT, recovering from Thursday’s low of 228.50 euros.
Ukrainian sea drones attacked a Russian navy base near the port of Novorossiysk, a major terminal for Russian grain and oil exports. The incident stirred doubts over massive Russian wheat shipments, after Ukrainian exports were already curtailed by Russia’s withdrawal from a Black Sea corridor deal and further threatened by Russian strikes against Ukrainian grain ports.
“Ukraine’s retaliation at Novorossiysk has prompted the market to revisit its assumption that Russia’s rich supplies of wheat will be able to make up for any shortfall from Ukraine,” consultancy CRM Agri said in a note.
However, gains for European and US futures were capped by signs that commercial disruption at Novorossiysk was limited. “Extra war risk premium is being added today but the market is not panicking and Novorossiysk is reportedly back at work,” one German trader said. Wheat markets earlier extended gains after a senior Indian official said the government is considering cutting or abolishing import taxes on wheat, fanning expectations India will import wheat to cool domestic prices.
European Union data showed the bloc’s soft wheat exports since July 1 were 13% below the year-ago level. In France, the farm ministry increased its estimate of this year’s soft wheat harvest.
French farmers made little progress in wrapping up wheat harvesting last week, data from farm office FranceAgriMer showed, as heavy rain hampered field work in the north.
Repeated rain was also hindering harvesting in Germany and across northern Europe.
“Each day which goes by raises fears about damage to German milling wheat quality, with the market concerned that the volume of feed wheat will be larger than expected,” another German trader said. “Concern is also growing about wheat after rain in Demark, Poland and the Baltic States.”
November rapeseed on Euronext rose 3.5% to 476 euros, extending a rally as a downward revision to France’s rapeseed crop estimate underscored disappointing harvest yields in Europe.
Meanwhile, France’s farm ministry on Friday raised its estimate of the country’s 2023 soft wheat production to 35.59 million metric tons, 5.6% above last year’s volume, from an initial projection of 35 million last month. The increased production outlook reflected an upward revision to the expected soft wheat yield, pegged at 7.47 tons per hectare (t/ha) compared with 7.34 t/ha forecast in July.
Other forecasters also expect France, the European Union’s biggest grain exporter, to bring in a bigger wheat crop this year, though hot, dry weather since spring is thought to have capped yields and current wet weather is raising concern about the quality of later-harvested crop.
In a first forecast for this year’s production of grain maize, excluding crop grown for seeds, the ministry anticipated output of 10.89 million tons, up about 2% from 10.65 million in 2022.
An expected rebound in the yield to 8.99 t/ha from last year’s drought-affected 7.86 t/ha was seen outweighing a drop of around 10% in the crop area, the ministry said.
Projected production would nonetheless be 16% below the average of the past five years. For rapeseed, France’s main oilseed crop, expected 2023 output was cut to 4.34 million metric tons from 4.64 million estimated in July, now 4% below the 2022 volume.
The ministry cited lower than expected yields in the harvest as it reduced its estimate of the national yield to 3.23 t/ha from 3.44 t/ha last month.
For sunflower seed, which like maize is harvested after summer, the ministry gave an initial production forecast of 1.98 million tons, up 11% from last year and the highest level this century.
For barley, expected 2023 output was revised up to 12.16 million tons from 11.9 million in July, reflecting an increased estimate for the winter barley crop, to put the harvest 6.5% above last year’s level. Durum wheat production however was revised down to 1.26 million tons, a 25-year low, as the ministry trimmed both its area and yield estimates.