As far as the Northern Hemisphere is concerned, all the harvest pieces are falling into place. Canada is still yet to reach the halfway mark in their harvest, but early results indicate a 35mmt crop. IKAR (a Russian analyst) recently lifted their estimate for Russian production to 86mmt (SovEcon is at 85.4mmt). This points to a likely Russian export program of around 40–45mmt and, given their slow start to the marketing year, gives the Russian influence a bearish overtone.
Russian wheat FOB prices have started to fall this week as more grain comes to port. This puts Black Sea FOB values around the same as French and Romanian, but still more expensive than US SRW. The US is capturing higher than higher-than-average export share for this time of year, with nearly 1mmt exported last week.
Markets are watching with interest the meeting in Beijing with Xi, President Putin, and India’s Prime Minister Modi. As the axis of the BRICS movement, a strategic alliance aimed at countering Western economic influence, the strengthening of this alliance can only be seen as trouble for Trump’s attempts to make the US the centre of power again. With China yet to import a single tonne of US soybeans this year – the first time since the 1990s – it tells a credible story of China’s growing influence, but also that Trump’s bluster has only served to alienate allies and trade partners.
Interesting to note this week that the US Federal Court ruled many of Trump’s tariffs illegal. The court has given the White House until 14 October to appeal. It is unclear if the tariffs would then be scrapped. The Secretary for Trade assured that a contingency plan is in place should the tariffs have to be wound back. A long, drawn-out appeal process seems likely.
ABARES recently released their September report and increased Australian production to 33.8mmt (4th largest), up from 30.6mmt. Most analysts suggest that 33mmt could easily be surpassed if we get anything like a kind spring. Barley at 14.6mmt is likely to be the 2nd largest on record and canola at 6.4mmt the 3rd largest. Coupled with the carryout from last season, the Australian supply situation looks heavy.
Beijing meeting underscores shifting global trade power
Next week
All told, the market is juggling heavy global supply, a resurgent Russian export presence and the geopolitics of a strengthening BRICS alliance. With China still sidelining US soybeans and trade tensions unresolved, sentiment leans defensive. Unless demand sparks or weather throws a curveball, the weight of supply looks set to keep a firm lid on prices.
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Click on graph to expand
Click on graph to expand
Data sources: ABARES, IKAR, SovEcon, Next Level Grain Marketing, Mecardo
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