Price of wheat at this year's minimums

Friday, 29. July 2016 18:02

Last week the grain market was characterized by a predominance of sellers. In recent weeks, they have been supported by good weather in the areas of the United States where crops are grown, as well as by forecasts of a bountiful harvest in various parts of the world and a high level of global stocks.

The last two months have been particularly unfavorable for wheat prices. Quotations of grain began a dynamic downward trend in the first half of June, which deepened in July, reaching the lowest levels since 2006. Currently, the price of wheat in the United States oscillates just above the level of $4 per bushel. This level can be considered as the next technical and psychological support, which in the short term can stop the supply side.

However, low wheat prices have fundamental reasons: they are primarily caused by a large supply of grain in the world. American production and stocks of wheat are large, and according to the Department of Agriculture, they will remain high next year too. In addition, wheat production has increased in the Black Sea region in the current year, which led to Russia and Ukraine having greater export opportunities.

The wheat production in the European Union has been a positive surprise since there have been fears it would fall significantly in the face of recent torrential rains and flooding (and in other regions, drought). And although the quality of the wheat cultivated in France and Germany deteriorated, the situation on the market has been better than expected.

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