In the latest short episode of Fast Forward, Fastmarkets grain market reporter Masha Belikova explores the key forces shaping wheat pricing across the Black Sea region and why prices have remained unexpectedly firm despite strong crop expectations.

US wheat futures and Euronext contracts were mixed on Tuesday June 16, with most US contracts moving lower, while Chicago soft red winter wheat futures posted gains. Euronext contracts also moved higher during the session. Global cash markets remained subdued, with limited activity as buyers largely stayed on the sidelines. Black Sea wheat prices are starting to trend lower under seasonal harvest pressure, while Australia, Europe and Argentina were broadly steady.

Soybean and soybean meal futures continued to ride on the coattails of the bullish National Oilseed Processors Association (NOPA) crush report on Tuesday June 16, with market chatter that China is bidding on — or indeed may have already bought — US beans for February, giving much-lauded impetus to further increases in futures markets over the period.

Soybean oil bases in Argentina and Brazil hit a record spread to their counterpart in the US Gulf on June 1, with a mix of biofuel policies, harvest pressures and export competition against rival oils creating massive regional divergences, although the spread decreased by the end of last week amid a CME soyoil futures sell-off.

EU wheat exports reached 19.23 million tonnes as of May 31, according to European Commission data, yet weekly flow data from Rouen port collapsed 66.6% to 72,923 tonnes in the week to June 3, pointing to a sharp deceleration in physical trade.

Fastmarkets’ weekly recap of the main movements in global cash markets.

Price spreads across European biofuel feedstocks and biodiesel markets widened sharply during the week to Thursday May 28, driven primarily by a steep decline in gasoil values and higher vegetable oil prices.

US wheat futures and Euronext contracts closed lower on Friday May 29, pressured by technical selling and weakness in crude oil markets. In global cash markets, activity was subdued heading into the weekend, with limited fresh business reported and most prices remaining unchanged.

Grain flows into the Persian Gulf have been displaced but not discontinued by the war between Iran and the US which has closed the Strait of Hormuz, according to data from shipbroker Simpson Spence Young (SSY) and Brazilian customs, seen by Fastmarkets on Tuesday May 19.

Egypt’s structural reliance on wheat imports remains intact, despite stronger domestic procurement efforts.