The US wheat market started the week closed for the observance of the Martin Luther King Memorial public holiday. It is probably just as well that we had some a break between trading and last Friday's USDA report being digested.
The headline screamed ‘bullish wheat’ because the report stated that
the US winter wheat area had been cut below what the trade had estimated. But
the wheat market is a multi-faceted beast and the subsequent price action suggested that the market is
looking at stocks today, not down the track.
Firstly, the US built carry-out corn and bean stocks, on the basis of higher (record) final yields
from last year’s harvest, but also a slow export pace. The subsequent increase in old crop stocks
was extremely bearish for both row crops and ultimately weighed on wheat. Even more bearish was that global stocks of wheat, corn, and beans were also ratcheted up.
Another concern for the commodity market was reports that Chinese purchases of corn and beans
may not be as robust as initially expected after Chinese corn production was
increased well beyond what was thought possible after last year’s harvest storms.
Global wheat production and ending stocks were both increased by around
2mmt due to higher production in both Russia and Ukraine.
The initial response was to see both corn and beans down 2.5% and wheat
a more modest 1.4% after the report. The bleeding may have continued if not for
the weekend and public holiday. I
suspect that the market will again turn its attention to winter crop conditions
ahead of Northern Hemisphere Spring (NH) and the potential for trade disruptions in the Red Sea.
The upshot of all this is that global grain stocks are a little more
comfortable than they were this time last week. Wheat is possibly the exception with
global stocks-to-use still at the lower end of comfort.
Next week
After the surprisingly bearish twist in the USDA report, the importers are starting to circle overhead. Egypt bought one cargo (60kmt) of French wheat in this week’s tender which is an encouraging sign that other origins (non-Black Sea) are now priced competitively.
After the relatively quiet last few months where the ag commodity markets have drift-ed lower, the establishment of the weather market has seen a welcome
Grain and oilseed markets are showing some good old-fashioned spring (in the northern hemisphere) volatility. We know that springtime dryness can grow into real production
Another week, another very mixed result. Last week, Middle Eastern politics drew the market’s attention, this week it’s all about the weather. Russia looked to
The worm seems to have turned somewhat in the grain and oilseed complex. While there is some short-term support coming from yet more geopolitical unrest,
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In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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Commodities yanked lower by USDA
Next week
After the surprisingly bearish twist in the USDA report, the importers are starting to circle overhead. Egypt bought one cargo (60kmt) of French wheat in this week’s tender which is an encouraging sign that other origins (non-Black Sea) are now priced competitively.
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Data sources: USDA, Reuters, Next Level Grain Marketing, Mecardo
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Weather bingo card
After the relatively quiet last few months where the ag commodity markets have drift-ed lower, the establishment of the weather market has seen a welcome
Getting good prices while avoiding volatility
Grain and oilseed markets are showing some good old-fashioned spring (in the northern hemisphere) volatility. We know that springtime dryness can grow into real production
Time to cut the BOM some slack
Another week, another very mixed result. Last week, Middle Eastern politics drew the market’s attention, this week it’s all about the weather. Russia looked to
Moving in the right direction
The worm seems to have turned somewhat in the grain and oilseed complex. While there is some short-term support coming from yet more geopolitical unrest,
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.