Last night was a ‘big data’ night, with all eyes peeled on the USDA’s WASDE (World Agricultural Supply & Demand Estimates) report. It did not disappoint. Firstly, and somewhat unsurprisingly, the USDA lifted global wheat production citing improvement in Russia (0.5mmt), Australia (1.5mmt) and Canada (0.2mmt). Where they caught the market off guard was by decreasing ending stocks by around 4mmt to 316.5mmt (compared with trade average 321mmt).
Increased exports lay at the heart of the decline in stocks. China continues to be an active market participant, with 8.5mmt imported to date. This is the highest since 1995/96. Pakistan is also seen trying to build stocks, having imported 2.5mmt this year.
There were relatively minor adjustments made to corn and soybean inventories. It should be noted that 1mmt was wiped off both the Argentinian corn and bean crops.
Further adding support to the wheat market last night was reports out of Russia that President Putin is considering a tax/duty on wheat exports to help curb food inflation. It seems a little strange to resort to these tactics for a country that has produced an 85mmt crop. Freight prices, a low Rouble, reluctant farmer selling have seen the price for wheat, flour, sugar and veg oils surge.
The tightening of global stocks has seen a welcome bounce in wheat prices after a period of sustained falls. On-going demand, particularly from China will be critical to maintain this momentum shift.
The week ahead….
Expect the market to stall as we head into the Christmas period. The new year should provide some relief for cash markets as the trade can reset credit limits and start to buy grain again ahead of a busy export program.
Last week we took a look at the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) forecasts for Australian wheat production. This week
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released its June Crop Report last week, which gives us the first look at
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Merry Xmas from WASDE
Increased exports lay at the heart of the decline in stocks. China continues to be an active market participant, with 8.5mmt imported to date. This is the highest since 1995/96. Pakistan is also seen trying to build stocks, having imported 2.5mmt this year.
There were relatively minor adjustments made to corn and soybean inventories. It should be noted that 1mmt was wiped off both the Argentinian corn and bean crops.
Further adding support to the wheat market last night was reports out of Russia that President Putin is considering a tax/duty on wheat exports to help curb food inflation. It seems a little strange to resort to these tactics for a country that has produced an 85mmt crop. Freight prices, a low Rouble, reluctant farmer selling have seen the price for wheat, flour, sugar and veg oils surge.
The tightening of global stocks has seen a welcome bounce in wheat prices after a period of sustained falls. On-going demand, particularly from China will be critical to maintain this momentum shift.
The week ahead….
Expect the market to stall as we head into the Christmas period. The new year should provide some relief for cash markets as the trade can reset credit limits and start to buy grain again ahead of a busy export program.
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Data sources: USDA, Reuters, CRMAgri, Mecardo
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Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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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.