The past week has been notable for a return of volatility. Wheat markets jumped out of the blocks after the US Memorial Day holiday. CBOT (SRW) closed limit up (30ȼ/bu) while Minneapolis Grain Exchange (HRS) closed up 40ȼ/bu over concerns around the condition of the wheat crop in the US Northern Plains and Canada (see 7 day observed and 7 day forecast, Figure 2 & 3). Adding to the pressure being felt in the wheat pit is the fact that temperatures are starting to increase as we head into the Summer months.
The most recent crop condition report has US Spring wheat at 43% gd-exc (Nth Dakota 31% gd-exc) compared with 80% gd-exc last year. While the corn crop is currently in good shape (76% gd-exc) this weather will bear watching if it doesn’t rain soon. If there is any hint of the US corn crop being in trouble, it could light a fuse on a powder keg.
Since then, the market has retraced most of the gains seen on Tuesday. A friendly corn condition report, rain through much of the corn belt and slowing Chinese demand has seen both the corn and wheat markets come off the boil.
Global FOB values have been coming under pressure. Black Sea origin wheat remains the cheapest, but the spread between Russian and Ukrainian wheat has widened a little as increased demand for Russian wheat has lifted prices. The Russian AgMin has come out stating the wheat export tax will remain indefinitely, while prices and global food demand remains high.
Indonesia recently purchased 60kmt from Black Sea origins (believed to be Ukraine) for US$310/t cost and freight (CnF) down from $315/t a week earlier. For comparison, Aussie wheat was also offered at $320/t. Indonesia is also rumoured to either be in the market, or has already bought another 240kmt of wheat, again believed to also be Black Sea origin.
The week ahead….
There will be equal parts interest in Chinese demand versus US weather. The USDA has penciled in China for 26mmt of corn this marketing year and exports will need to see an increase if sales are to meet this target. Anything less will likely be bearish for corn and wheat.
Faba beans have become a popular break crop in southern states, delivering not only a valuable export or feed commodity, but also giving nutritional benefits
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.
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.
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.
A week in wheat can be a long time
The most recent crop condition report has US Spring wheat at 43% gd-exc (Nth Dakota 31% gd-exc) compared with 80% gd-exc last year. While the corn crop is currently in good shape (76% gd-exc) this weather will bear watching if it doesn’t rain soon. If there is any hint of the US corn crop being in trouble, it could light a fuse on a powder keg.
Since then, the market has retraced most of the gains seen on Tuesday. A friendly corn condition report, rain through much of the corn belt and slowing Chinese demand has seen both the corn and wheat markets come off the boil.
Global FOB values have been coming under pressure. Black Sea origin wheat remains the cheapest, but the spread between Russian and Ukrainian wheat has widened a little as increased demand for Russian wheat has lifted prices. The Russian AgMin has come out stating the wheat export tax will remain indefinitely, while prices and global food demand remains high.
Indonesia recently purchased 60kmt from Black Sea origins (believed to be Ukraine) for US$310/t cost and freight (CnF) down from $315/t a week earlier. For comparison, Aussie wheat was also offered at $320/t. Indonesia is also rumoured to either be in the market, or has already bought another 240kmt of wheat, again believed to also be Black Sea origin.
The week ahead….
There will be equal parts interest in Chinese demand versus US weather. The USDA has penciled in China for 26mmt of corn this marketing year and exports will need to see an increase if sales are to meet this target. Anything less will likely be bearish for corn and wheat.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: USDA, Reuters, Atria Brokers, Mecardo
Categories
Have any questions or comments?
Geopolitics and shorts weather
Amazing the difference a week can make. It all started last Friday morning, with continued escalations in the Middle East. The wheat market jumped 20
Exchange rates helping wheat values
The exchange rate has been in the news lately, with the Australian dollar falling to a six-month low last week. Given this, we thought it
Argentina dealt a cruel hand
It has been a relatively benign week in the wheat market. Some of the risk premium that had built up over Middle East concerns has
Performance from pulses
Faba beans have become a popular break crop in southern states, delivering not only a valuable export or feed commodity, but also giving nutritional benefits
Want market insights delivered straight to your inbox?
Sign up to the mailing list to get regular updates to new analysis and market outlooks
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.