In a rare turn of events, the wheat market closed higher this week, breaking a multi-month downtrend. Still, one week does not make a trend. On a broader scale, global wheat prices continue to weaken. As of August 22, wheat was trading around US$5.07 per bushel, down roughly 6 to 7% over the past month, and about 4 to 5% lower year on year.
The lower price environment is beginning to attract buying interest. Syria has issued a 200kmt tender, and there are whispers of Chinese buyers eyeing the market for opportunities. Meanwhile, Egypt’s state grain buyer has locked in at least 200kmt of French wheat via private deals, alongside several 30kmt shipments from Ukraine and Romania, with total purchases potentially exceeding 400kmt. Egypt’s choice to source from France is notable as it signals both a diversification of origins and highlights that Black Sea wheat is facing delivery delays and higher costs.
SovEcon has slightly revised up its estimate for Russian wheat production, now pegged at 85.4mmt, citing improved conditions in Siberia and the Urals. However, this raises logistical questions as transporting grain from northern regions to Black Sea ports adds cost and time. July wheat exports out of Russia were just 2.0 to 2.6mmt, the lowest since July 2008 and well below the 3.7mmt recorded last year. A combination of low prices, tight carryover stocks, and adverse weather has dampened early-season sales, suggesting more volume may arrive later in the marketing year.
In the US, the Pro Farmer crop tour is underway. While early indications point to a large corn and soybean crop, expectations for a record are softening. Isolated dry spots, pollination issues, and insect damage are tempering optimism in key growing regions. For USDA’s record projections to hold, the tour would need to reveal a more uniform yield profile. On the export front, US corn shipments remain strong to all destinations other than China, which is helping to lend price support.
China remains a wildcard. With two consecutive years of domestic wheat output at 140mmt, its import appetite remains subdued. Broader macro challenges including an aging population, economic uncertainty, and a shrinking pig herd continue to weigh on both food and feed demand. The key exception is soybeans, where China remains heavily reliant on imports. Brazil continues to dominate that trade, exporting over 10mmt per month to China since March.
Next week
As the Northern Hemisphere wheat harvest wraps up, market attention is shifting toward corn and soybean harvests. Australian and Argentine crops remain on track, though spring weather will be critical in determining final outcomes and future price direction.
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Importers starting to line up
The lower price environment is beginning to attract buying interest. Syria has issued a 200kmt tender, and there are whispers of Chinese buyers eyeing the market for opportunities. Meanwhile, Egypt’s state grain buyer has locked in at least 200kmt of French wheat via private deals, alongside several 30kmt shipments from Ukraine and Romania, with total purchases potentially exceeding 400kmt. Egypt’s choice to source from France is notable as it signals both a diversification of origins and highlights that Black Sea wheat is facing delivery delays and higher costs.
SovEcon has slightly revised up its estimate for Russian wheat production, now pegged at 85.4mmt, citing improved conditions in Siberia and the Urals. However, this raises logistical questions as transporting grain from northern regions to Black Sea ports adds cost and time. July wheat exports out of Russia were just 2.0 to 2.6mmt, the lowest since July 2008 and well below the 3.7mmt recorded last year. A combination of low prices, tight carryover stocks, and adverse weather has dampened early-season sales, suggesting more volume may arrive later in the marketing year.
In the US, the Pro Farmer crop tour is underway. While early indications point to a large corn and soybean crop, expectations for a record are softening. Isolated dry spots, pollination issues, and insect damage are tempering optimism in key growing regions. For USDA’s record projections to hold, the tour would need to reveal a more uniform yield profile. On the export front, US corn shipments remain strong to all destinations other than China, which is helping to lend price support.
China remains a wildcard. With two consecutive years of domestic wheat output at 140mmt, its import appetite remains subdued. Broader macro challenges including an aging population, economic uncertainty, and a shrinking pig herd continue to weigh on both food and feed demand. The key exception is soybeans, where China remains heavily reliant on imports. Brazil continues to dominate that trade, exporting over 10mmt per month to China since March.
Next week
As the Northern Hemisphere wheat harvest wraps up, market attention is shifting toward corn and soybean harvests. Australian and Argentine crops remain on track, though spring weather will be critical in determining final outcomes and future price direction.
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Sources: SovEcon, Reuters, Next Level Grain Marketing, Mecardo
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