European wheat futures fall on belief Ukraine's safe shipping channel will stay

Russian wheat prices fell last week amid stagnant export demand
calendar icon 18 October 2022
clock icon 2 minute read

European wheat futures fell on Monday, hit by increasing expectations that the safe shipping channel for Ukraine's grain exports will continue to operate, Reuters reported, citing traders as its source.

A firm euro, which makes EU wheat less competitive in global markets, also pressured prices, they added.

Benchmark December wheat on the Euronext exchange was down 0.5%, or 2.00 euros, at 348.75 euros ($341.57) a tonne at 1417 GMT.

Russia's deputy defence minister and the UN Secretary General discussed the possibility of extending the shipping corridor deal on Monday.

"The corridor is driving the market for the moment," a trader said. "There is a sentiment that it will be extended beyond November but there is nothing more uncertain."

Wheat markets have been grappling with mixed indications over the UN-backed shipping corridor, which has allowed Ukraine's exports to pick up despite its war with Russia.

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

German traders were closely watching events in Ukraine.

"I think the moderate reaction in futures markets to the flare-up in fighting in Ukraine shows there are expectations that the safe shipping channel from Ukraine will be extended," a German trader said. "I think an extension is also in Russia's interest."

German export premiums remained strong, with a brisk port loading programme of past sales. High-quality wheat supplies were also reduced by drought this summer.

Sellers of standard 12% protein wheat for October delivery in Hamburg were seeking a premium of about 13 euros over the Euronext December contract.

Russian wheat prices fell last week amid stagnant export demand, the IKAR consultancy said.

"This is depressing news for the EU as Russian wheat looks cheaper than west EU supplies in export markets," another trader said.

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