The wheat market is trying to balance the news coming out of Russia. On one hand, SovEcon has released its outlook for the Russian 2025 season at a relatively modest 80.1mmt, down year on year on year. On the other hand, Russian exports look set to break another export record for October at 4.8mmt, setting a third consecutive month of record volumes shipped.
The frenetic pace is attributed to traders wanting to stay ahead of
looming export tax hikes but also good export margins and less competition from
the Balkan states of Romania and Bulgaria (SovEcon). Eventually, the pace
should slow as the export taxes bite and FOB values rise.
It will be interesting to watch how aggressively French wheat is
marketed. Even though current export volumes are delayed (EU27 shipments are
down 31% year on year), the new crop wheat seeding program is lagging badly as
well. The wet weather that plagued this year’s crop, is extending into the new season. French wheat seeding is estimated at only 10% complete, compared to 32% this time last year (France AgriMer). Later sown crops usually experience yield penalties, so we may see a reduction in area if the skies do not clear in time.
Argentina has enjoyed an excellent rain at a critical time on their
wheat crop. Between 30-90mm fell across much of their core agricultural regions
in the past week, reviving the crop that had been struggling due to moisture
deficits. Cheap Argentine wheat will be a key competitor of Australian grain into SE Asia.
In their September report, the FAO noted that wheat prices have bucked
the recent trend and increased after three months of decline. Poor weather in
key exporters and geopolitical risk were cited for the turnaround. The report also noted that prices were 10% lower than at the same
time last year, capped by cheap supplies coming out of the Black Sea.
Next week
T’was the night before harvest, and all through the trade, not a phone was ringing, not even to rage. A poet I’m not (sincerest apologies to CC Moore) but at a time when the Australian trade should be posting their most enticing bids, the cash price keeps falling. I can make an argument that global prices will rally into the New Year, but if and when this happens is any-one’s guess.
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Mixed signals and bad poetry
The frenetic pace is attributed to traders wanting to stay ahead of looming export tax hikes but also good export margins and less competition from the Balkan states of Romania and Bulgaria (SovEcon). Eventually, the pace should slow as the export taxes bite and FOB values rise.
It will be interesting to watch how aggressively French wheat is marketed. Even though current export volumes are delayed (EU27 shipments are down 31% year on year), the new crop wheat seeding program is lagging badly as well. The wet weather that plagued this year’s crop, is extending into the new season. French wheat seeding is estimated at only 10% complete, compared to 32% this time last year (France AgriMer). Later sown crops usually experience yield penalties, so we may see a reduction in area if the skies do not clear in time.
Argentina has enjoyed an excellent rain at a critical time on their wheat crop. Between 30-90mm fell across much of their core agricultural regions in the past week, reviving the crop that had been struggling due to moisture deficits. Cheap Argentine wheat will be a key competitor of Australian grain into SE Asia.
In their September report, the FAO noted that wheat prices have bucked the recent trend and increased after three months of decline. Poor weather in key exporters and geopolitical risk were cited for the turnaround. The report also noted that prices were 10% lower than at the same time last year, capped by cheap supplies coming out of the Black Sea.
Next week
T’was the night before harvest, and all through the trade, not a phone was ringing, not even to rage. A poet I’m not (sincerest apologies to CC Moore) but at a time when the Australian trade should be posting their most enticing bids, the cash price keeps falling. I can make an argument that global prices will rally into the New Year, but if and when this happens is any-one’s guess.
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Click on graph to expand
Click on graph to expand
Data sources: Mecardo
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
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.
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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.