The world wheat market has fully entered the “weather market” phase when the weather conditions in the main grain-producing countries begin to exert a decisive influence on prices.

Reducing climate risks in the US, on the one hand...

In the US, HRW's wheat crop ratings continue to improve thanks to the rains that occurred in the area of its cultivation in late March-early April.

This calms traders and exerts considerable pressure on wheat futures prices on the Chicago Mercantile Exchange. So, from the beginning of April, the price of the May futures fell by almost 10 USD / t, having reached the minimum level since the beginning of 2017.

...and the intensification of drought in Europe, on the other hand

A strong decline in wheat prices in the US market has a significant impact on the European cereal market. Nevertheless, the downward movement of the latter is limited by the climatic risks observed in the region at the moment. Note that in Western Europe, the deficit of moisture in the soil continues to increase. In some regions of France, precipitation is not present for a month, which leads to a slow deterioration in the state of crops. So, according to FranceAgriMer, last week the share of soft wheat crops in a state of “good and excellent” fell by 4% compared to the previous week.

It should be noted that no significant precipitation is forecast in the next 15 days in France. However, you need to closely monitor the change in weather forecasts, because they are very changeable.

Another risk factor for the future of the European harvest is the strong temperature drop last week when in most of France frosts were fixed to -3 ... -4 C, Germany - to -5 ... -6 С, which could damage plants Wheat.

The stocks of wheat in the main exporting countries are steadily declining

Export sales of wheat from the US remain high. Note that they are already close to the export level forecast by USDA for the current campaign, until the end of which there are still 8 weeks.

Export supplies of soft wheat from the EU also maintain their high rates, as a result of which we increased our forecast of grain exports from the EU for the current campaign to 24 million tons.

Summarizing all the above, we note that, although at the moment the world wheat market shows a decline, it still remains extremely sensitive to weather factors. So, the sudden growth of climatic risks in the main regions of grain production can at any moment lead to a rapid turn of the market. In addition, a serious support factor is also the tension of the world balance at the end of the campaign. Thus, in the medium term, the wheat market can still observe periods of price growth, which can be determined by closely monitoring factors (primarily weather) that have a significant impact on the market.