On Friday, wheat prices stepped lower, but the commodity remained on course for a weekly gain. The continued tightened global supplies have significantly supported the market.
The grain’s most active contract on the Chicago Board of Trade skidded 0.82% or 9.12 points to $1,096.88 per metric ton.
This downturn came after an upswing of 2.15% to $1,102.12 per metric ton yesterday. Nevertheless, wheat futures are on track for a 3.00% increase this week.
Prices largely benefitted from the hot and dry weather across India, one of the world’s largest producers of the crop. The extreme environmental condition will likely diminish the nation’s export potential.
New Delhi has enjoyed five consecutive years of record harvests. Then, the country recently stepped up export sales to fill the supply gap left by the war in Ukraine.
However, India reduced its wheat output forecast by 6.30 million tonnes to 105.00 million tonnes this week. The spiking temperatures in mid-March lowered its crop yields. Regardless, local officials have dismissed claims that they consider curbing exports.
Consequently, similar conditions erode US crops, whereas grains have also wilted under hot, dry conditions as harvest approaches.
Meanwhile, rains this week in the American plains arrived too late to help much of the winter wheat in Oklahoma. The state is the second-leading producer of grain in the region.
Eventually, the farmers will soon begin harvesting the smallest crop in eight years. Experts projected 57.05 million bushels this week, half the size of last year’s reap.
Moreover, they anticipated an average winter wheat yield of 23.50 bushels per acre, the state’s lowest since 2014.
Accordingly, 69.00% of the US crop experienced drought as of May 3, including the top producer Kansas.
Food prices ease slightly after wheat’s surge
Meanwhile, world food prices slightly declined in April. This is after hitting a record high due to the mounting costs of wheat and other grains.
The Food and Agriculture Organization’s (FAO) food price index posted 158.50 points last month. The figure edged down from an upwardly revised 159.7 for March.
Subsequently, the agency’s cereal price benchmark skidded 0.70% in April after its previous 17.00% surge.
FAO explained that wheat initially rose because of the blockage of ports in Kyiv and worries about crop conditions in the US. Nevertheless, the larger shipments from India and higher-than-expected exports from Russia offset the concerns.
Still, the organization retained its world cereal production forecast at 2.80 billion tonnes, representing an annual 0.80% gain. In addition, it decreased its projection of world wheat output to 782.00 million tonnes from 784.00 million.