Most relevant to us were the wheat numbers. Improved production estimates in Argentina, Russia, the EU27 and Australia combined to increase global supply by 13mmt. Even with increased consumption, total carryout was increased by 7.5mmt, predominantly in the major exporters.
FOB prices reflect the building production estimates, with Argentine values falling US$3 to US$207 FOB, compared with French at US$225 and US SRW at US$236.
The US and China trade deal is showing signs of life after disappointing initial purchases. The removal of Chinese tariffs on a number of US agricultural commodities appears to have been the catalyst for some speculative buying of soybeans, now over 1mmt for the week, and last night a purchase of 132kmt of US white wheat. One might have thought this would be a good news story for markets that have been starved of good news, but as is often the case in grain markets, the reality doesn’t match the rhetoric. Buy the rumour, sell the fact.
Markets have come under significant pressure this week as increasing Russian production, coupled with an expected increase in exports, has helped to dampen price outlooks. SovEcon again lifted production estimates by 800kmt to 88.6mmt on record yields coming out of Siberia. Early signs are good for this season’s Russian winter wheat crop. The crop is in much better condition heading into winter compared to last year’s drought-affected crop. Early estimates still place Russian production for the 2026 crop around 83mmt on reduced area.
The market took a rather poor turn on news that the US was again trying to broker a peace deal between Russia and Ukraine. I’m not an expert in international relations, but the same expectations and compromises are being rolled out, in that Ukraine is expected to cede land and reduce the size of its army in return for Russia ceasing all military action. It feels like a rerun of a bad action movie, and one we’ve all seen before.
Big crops tend to get bigger
Next week
The ag markets are a mix of political theatre, weather risk, and shifting supply dynamics. Corn bears have the upper hand for now, with wheat remaining stuck between supply pressure and geopolitics.
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Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: CRM Agri, Reuters, USDA, SovEcon, Bloomberg, Mecardo, Next Level Grain Marketing
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