Wheat head closeup in a field

Another tough week in the wheat markets. How long and low can they fall? The script reads that a huge Russian stockpile, frenetic export pace, and cheap offers are the reason.

Another tough week in the wheat markets. How long and low can they fall? The script reads that a huge Russian stockpile, frenetic export pace, and cheap offers are the reason.

There is a lot of selling pressure coming out of Europe and the Black Sea as new-season wheat hits the pipelines. Eventually, these sources will slow up their export pace which gives me reason to think that this oversold market is ripe for a bounce.

Is it going to have to take something calamitous to right this ship? Or will time and the natural order of things see this market regain some strength? The failure of the grain corridor wasn’t enough. The ongoing conflict in the Black Sea …. pfft whatever. Drought in North America… no worries. The USDA cut a ‘mere’ 7mmt tonnes from global production this week…barely a ripple.

Those on the bullish side of the equation point to deteriorating pro-duction in Canada and Australia. Actual figures are yet to be realised but most of the as-sumptions are already priced into the market. On paper, major exporter stocks are getting tighter. Outside of China, major exporter stocks are penciled in at 54mmt, or 13.5% stocks to use. This is getting reasonably tight. Maybe the world’s markets are simply getting better at trading and making use of food and feed alternatives.

European wheat values were also under pressure. EU27 exports are down 32% from this time last year due to heavy Russian competition and the inflow of Ukrainian wheat across the borders.

The USDA report this week didn’t hold too many surprises other than the cut to wheat production, largely in the major exporter group. Corn-ending stocks were bumped up above 2B bushels, well into the comfortable range. Soybeans saw produc-tion trimmed and carryover stocks also reduced which has led to a modest bounce in futures, spilling into the wider oilseed market.  

Next week

The drying trend in Australia is starting to make headlines in global markets. ABARES has us at 25mmt, USDA at 26mmt. It feels like it could be lower than these estimates which will again eat into export channels.

Have any questions or comments?

We love to hear from you!

Click on graph to expand

Click on graph to expand

Data sources: Reuters, SovEcon, Dartboard Commodities, Next Level Grain Marketing, 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!
Grains & Oilseeds

USDA offers up a vanilla slice

Last night, the market rolled back on itself after the USDA printed a very vanilla April WASDE (World Ag Supply & Demand Estimates) report. With

Read More »
Grains & Oilseeds

USDA uncovers a big hole

Last week, I finished off the weekly market comment by saying “ Unless the USDA surprises with a sharper-than-expected reduction in corn area, I suspect

Read More »
Canola field
Grains & Oilseeds

Long term crop forecasts

It is hard enough forecasting commodity production for the coming season, let alone any further. Regardless, The Australian Bureau of Agricultural and Resource Economics and

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
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.