Euronext wheat prices fell on Tuesday after the U.S. announced an agreement with Russia and Ukraine that would protect maritime trade along the Black Sea. This could lead to increased competition for exports, traders reported.

Euronext's May wheat price settled at 220.25 euro ($238.02) per metric ton after hitting its lowest level since March 12, at 219.75 euro. Washington, which wants to end the conflict in Ukraine, has said that it reached separate agreements with Kyiv, and Moscow, to ensure safe navigation on the Black Sea, and to stop attacks from both countries against each other's power facilities.

While the Black Sea grain export volume has recovered from the disruptions at the beginning of the war traders have said that improved security and the U.S. commitment in facilitating market access for Russian agricultural products could stiffen the competition. Moscow said that the agreement would be contingent on the lifting of certain Western financial sanctions.

The financial aspects may help Russian exports. "It's not really new, but it is a lot to announce. The Black Sea trade already works pretty much the same as before the war," said a futures dealer. Euronext's deferred positions fell slightly more than the May futures. The traders said that any increase in Russian exports will be more likely to occur next season as the rally of the rouble has slowed shipments at the end the current season.

Euronext losses were modest, as traders are awaiting further details. Prices also fell during Monday's negotiations.

Another dealer stated that "Euronext has given up 5 euro between yesterday and today. It's already priced in."

Chicago wheat is also softer.

The export sentiment in Western Europe remains cautious.

"The export-competitiveness of west EU is looking better and if the exchange rate plays ball, maybe some new export sales are possible," one German trader said.

The demand for the products is expected to be low due to the holiday week that follows the end of Ramadan in Muslim countries.

Traders said that Russian, Romanian, and Argentinean 11.5% protein wheat delivered in April/May all traded between $244-$247 per ton, Free on Board. This is about $2-$3 below the West European Union, depending on Euronext.

The price of Ukrainian wheat is about $3 to $4 below the Russian wheat with 11.5% protein, and U.S. red winter soft wheat costs around $233 to $237 per ton FOB. Data showed that EU soft wheat exports for this season reached 15.46 millions metric tons. This is down 35% from the previous year.

(source: Reuters)