April 2, 2023

Great Indian Mutiny

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Wheat rises, US and Indian crop damage threatens distribution

Bloomberg – Severe red winter wheat futures rose for the second day in a row as worsening weather by major producers intensified concerns about lower global food stocks.

Heat has affected the crop in India, prompting the country to consider export restrictions, Bloomberg said on Wednesday. This raises supply concerns, especially as India’s grain exports have increased following the Russian invasion of Ukraine.

In addition, tough red winter wheat grown in Kansas and neighboring U.S. states is at risk due to severe drought. The harvest of the grain used for bread flour is expected in June, which means that if there is a chance of improving yields, adequate rainfall in the coming weeks will be important.

“Now, the harvest will be short,” said Joe Nasmier, a broker for Frontier Futures in Minneapolis, in a phone interview Thursday. Drought damage in places like Texas and Oklahoma is “already far away”, while parts of Kansas and Colorado could still benefit from the rain, he said.

In Europe, some wheat-producing areas have also been affected by the rains, raising concerns about a worsening global hunger crisis.

“If low quantities of wheat from India now reach the global market, there is a risk that supply will be tightened again,” said Commerzbank AG (CBK) analyst Carsten Fritz in a note. “Uncertainty in this regard will continue to worry the wheat market and lead to further price rises.”

Wheat futures tracking hard red winter grains are traded at a premium to the global standard in Chicago, which is linked to the soft red winter wheat used to make cookies and cakes. This difference indicates that the supply of the previous ones will decrease in the coming 2022-23 season.

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The most active hard red winter wheat contract was 3.3% higher at $ 11.6025 in Chicago. Benchmark futures rose 2.7% to $ 11.06 a bushel.

In the case of spring wheat, high protein content delays cultivation in the northern plains of the United States and Canada by wet fields. July futures rose 2% to $ 12.01 a bushel in Minneapolis.

With the help of James Poole.

This article was translated by Estefania Salinas Conza