Wheat Markets Soften on Turkey Grain Corridor Hopes

Wheat markets started the week on a softer note after last week's sharp rally. The price of wheat is giving back some gains as reports emerge that Turkey is working on a possible new Black Sea grain corridor, encouraging profit taking.

The main driving news story in wheat markets remains the disruptions to Black Sea shipping due to Russia's redirecting of grain towards Baltic and land routes, while Ukraine relies more heavily on Danube and western export corridors. Ukrainian railway data shows that August grain exports are down 60% month-over-month, with congestion around Danube ports remaining elevated.

The global wheat balance remains relatively supportive, with the IGC outlook placing world wheat production near 817 MMT against consumption around 826 MMT, implying another inventory drawdown. Major exporters' stocks are expected to decline year-over-year, making supplies available to the international market tighter and more concentrated, with larger logistics risk.

Stronger crops in importing regions such as Turkey, North Africa, and other key areas will help importers delay their import needs slightly longer than usual. Europe has a smaller wheat crop, but French milling quality looks favorable, with 89% of tested French wheat at 11% protein or higher, compared to an 80% five-year average.

Ukraine has harvested a respectable wheat crop, but export logistics remain the main issue. Wheat production reached 24.6 MMT from 5.0 million hectares as of August 25, but exports were only 1.4 MMT through August 21, down 31% year-over-year.