The decline in wheat prices halted for a while, potential rise to 300 euros per ton

The recovery of wheat prices above 270 euros per ton reflects speculation about the interruption of Russian wheat exports aimed at preventing further depreciation of this agricultural commodity. This comes just a few days after the trade agreement between Russia and Ukraine for the export of wheat. Although there is no talk of a permanent export ban, authorities ‘advise’ exporters not to sell wheat below 275 euros per ton, as they risk losing access to all necessary export certificates, according to the analysis of commodity market movements within HUP’s Focus of the Week.

State-controlled exporters have recently gained significant importance after Russia expelled all foreign wheat traders from the country. Their production-logistical infrastructure will be taken over by domestic oligarchs who are now consolidating local agricultural output, which increases their bargaining power, allowing Russia to charge more generously for export duties and further finance military operations.

In line with the aforementioned, the decline in wheat prices has evidently been halted for a while, so a potential rise to 300 euros per ton is possible, the analysis states.

According to the International Lead and Zinc Study Group (ILZSG), the zinc market reported a deficit of 19,000 tons in January compared to a surplus of 15,000 tons in January 2022. The reason for this is a relatively larger decline in production (-5 percent annually) compared to demand (-2 percent), which we have witnessed throughout a good part of last year. The closure of zinc processing plants occurred due to the enormous increase in energy prices, especially in Europe, which produces 18 percent of the world’s zinc output.

Persistently high energy prices threaten the recovery of zinc production in 2023 and the overall ILZSG forecast, which predicts that the zinc market deficit would be halved to 150,000 tons compared to last year. Most European producers who ‘paused’ production last year have still not resumed it despite the recent drop in energy prices. In line with the aforementioned, a significant rise in zinc prices is expected in the coming months, concludes the HUP analysis.