European wheat futures fall on belief that Ukraine’s safe shipping channel will remain in place

Russian wheat prices fell last week amid flat export demand

October 18, 2022

2 minutes read

European wheat futures fell on Monday, hit by mounting expectations that the safe shipping channel for Ukraine’s grain exports will remain operational, Reuters reported, citing traders as a source.

A firm euro, making EU wheat less competitive in world markets, has also put pressure on prices, they added.

December benchmark wheat on the Euronext exchange fell 0.5% or €2.00 to 348.75 euros ($341.57) a tonne by 1417 GMT.

Russia’s Deputy Defense Minister and the UN Secretary-General on Monday discussed the possibility of extending the shipping corridor agreement.

“The corridor is driving the market at the moment,” said one trader. “There is a feeling that it will be extended beyond November, but there is nothing uncertain.”

Wheat markets have grappled with mixed signs about the United Nations-backed shipping corridor that has allowed Ukrainian exports to surge despite its war with Russia.

Ukrainian grain exports in the first 17 days of October were only 2.4% lower than in the same period of 2021.

German traders closely monitored events in Ukraine.

“I think the moderate reaction of the futures markets to the upsurge in fighting in Ukraine shows that the safe shipping channel from Ukraine is expected to expand,” said a German trader. “I think an extension is also in Russia’s interest.”

German export premiums remained strong, with a buoyant port loading program for earlier sales. The supply of high-quality wheat was also reduced this summer due to the drought.

Sellers of standard wheat with 12% protein for October delivery in Hamburg wanted a premium of around 13 euros over the Euronext December contract.

Russian wheat prices fell last week amid stagnant export demand, consulting firm ICAR said.

“This is depressing news for the EU as Russian wheat looks cheaper on export markets than Western EU supplies,” said another trader.