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.

Have any questions or comments?

We love to hear from you!
Print This Post

Click on graph to expand

Click on graph to expand

Click on graph to expand

Data sources: USDA, Reuters, Atria Brokers, Mecardo

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
US wheat field rain
Grains & Oilseeds

Wheat finds its feet

Wheat is doing something highly unusual. It is going up. Having withered on the vine for the best part of 12 months, wheat has finally

Read More »
Grains & Oilseeds

Wheat weaves its tangled web

Did Australian weather just move the market’s needle? After weeks of the market edging lower and lower (we hit multi-year lows earlier this week with

Read More »

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

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
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.

Photo of a farmer surrounded by Merino sheep in dusty yards
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. 

Image of harvested grain pouring into a chaser bin

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.