Wheat lost almost half of its value on international markets, after the maximum levels seen following the invasion of Ukraine by Russia, due to the increase in supply and this situation could continue, according to the analysts consulted by Lusa.
Despite the drop in wheat prices, analysts are divided as to its impact on the final price for the consumer.
“After the historic highs reached two years ago, following the Russian invasion of Ukraine, the price of wheat has already lost almost half of its value on international markets, currently trading at slightly above six dollars each 60 pounds/weight, that is, around 27.2kg” (kilograms), pointed out, in response to Lusa, the senior economist at Banco Carregosa, Paulo Monteiro Rosa.
Similar to what happened with wheat, the price of corn and soybeans also reached 2020 lows.
Paulo Monteiro Rosa says it is “likely that there will be a slowdown in the price of wheat at warehouses”, which will be reflected in retail and, in particular, in wheat derivatives, such as bread.
“Eventually, this drop in the prices of some cereals should have a favorable impact on the slowdown in inflation, having driven the significant rise in food prices in the last two years”, he added .
For the senior economist at Banco Carregosa, if there is no worsening of geopolitical trends, the price of wheat could remain low.
This trend could be further aggravated if demand, “despite being inelastic, decreases in the face of some perception of a recession on the horizon”.
According to brokerage Xtb, as of early June, 6% of US winter wheat was harvested, above the average over the last five years, “while the state of winter wheat crops is at a maximum of three years”.
On the other hand, Ukraine maintained its cereal harvest forecast, despite the bad weather recorded in May.
Xtb also highlighted, in a statement, that June’s volatility “could be even greater”, with the release of surveys on harvests in the Black Sea and other regions.
Still, the broker expects that the price of wheat could recover in the short term.
ActivTrades consultant Marco Silva pointed out, in turn, that the drop in wheat prices was influenced by the “sustainable supply on the market”, which was favored by the Ukrainian export agreement , “which allowed us to promote supply in the global market”.
The main consequence of this situation, according to the consultant, is the stabilization of prices for wheat products.
The remaining cereals should also be “slightly” affected, but not as much as they were at the beginning of the invasion of Ukraine by Russia.
This trend is expected to continue, unless there is a disruption in production.
However, the price for the consumer should not change.
“Companies were quick to raise prices, but there was no correction in the market when they registered a drop in wheat prices. For this reason, there will hardly be a drop in prices those of the final products”, concluded Marco Silva.
Lusa contacted the National Association of Proteaginous Oilseeds and Cereals Producers (ANPOC) and the Confederation of Farmers of Portugal (CAP), but received no response.
