World wheat prices have continued to fall this week as new crop prospects improve. Good rain fell across the Northern US and Canada in the past week, with the forecast calling for some good follow up rains as well.
The US crop tour is underway with participants calling for record yield potential in Kansas HRW wheat areas. Scouts there are calling yield potential at 58.1bu/ac (3.9t/ha) compared to the 5-year average of 43.1bu/ac (2.89t/ha). Good late rains (see observed map below) have the crop in excellent shape, with the only question hovering over protein content.
The Canadians too are seeing a very timely burst of moisture. There has been a swing away from wheat acres this year, according to StatsCan, citing a move to higher canola and corn acres. Due to the late start, yields have also been revised lower to an average of 3.37t/ha compared with 3.52t/ha recorded last season. Spring wheat seeding (the major class of wheat grown in Canada) is at 74% complete, well ahead of the 5-year average of 48%. The USDA forecasts Canadian production for the 21/22 season to be 33.5mmt, down from 35.2mmt last year.
Canola prices have also come under pressure, albeit not to the same extent as wheat. The Jan ’21 ICE contract has lost about C$35/t since the forecast (and now realised) rain across the Prairies. With the outlook for increased oilseed demand into 21/22, prices are expected to remain firm.
The wheat market is in balance between its own fairly heavy fundamental outlook, with the knowledge that the US corn and bean crops are still heavily reliant on good weather. While the wheat market feels softer, we are still at the mercy of the weather gods.
The week ahead….
Overnight, some bargain buying by China saw a limit up move in corn with wheat going along for the ride. There is also a frost advisory message for some parts of the US corn belt which got the bulls excited. Continue to watch the spring wheat areas of the US Northern Plains and Canada which are facing historically dry conditions and will need excellent in-crop rains to reach full potential.
The fact that the wheat market has been relatively unchanged week on week doesn’t imply the market has been without volatility. After a slightly bearish
Another tumultuous week in wheat – and indeed commodities and stocks as a whole. President Trump rolled out 25% broad-based tariffs on Canada and Mexico
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.
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.
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.
New crop conditions continue to weigh on the market
The US crop tour is underway with participants calling for record yield potential in Kansas HRW wheat areas. Scouts there are calling yield potential at 58.1bu/ac (3.9t/ha) compared to the 5-year average of 43.1bu/ac (2.89t/ha). Good late rains (see observed map below) have the crop in excellent shape, with the only question hovering over protein content.
The Canadians too are seeing a very timely burst of moisture. There has been a swing away from wheat acres this year, according to StatsCan, citing a move to higher canola and corn acres. Due to the late start, yields have also been revised lower to an average of 3.37t/ha compared with 3.52t/ha recorded last season. Spring wheat seeding (the major class of wheat grown in Canada) is at 74% complete, well ahead of the 5-year average of 48%. The USDA forecasts Canadian production for the 21/22 season to be 33.5mmt, down from 35.2mmt last year.
Canola prices have also come under pressure, albeit not to the same extent as wheat. The Jan ’21 ICE contract has lost about C$35/t since the forecast (and now realised) rain across the Prairies. With the outlook for increased oilseed demand into 21/22, prices are expected to remain firm.
The wheat market is in balance between its own fairly heavy fundamental outlook, with the knowledge that the US corn and bean crops are still heavily reliant on good weather. While the wheat market feels softer, we are still at the mercy of the weather gods.
The week ahead….
Overnight, some bargain buying by China saw a limit up move in corn with wheat going along for the ride. There is also a frost advisory message for some parts of the US corn belt which got the bulls excited. Continue to watch the spring wheat areas of the US Northern Plains and Canada which are facing historically dry conditions and will need excellent in-crop rains to reach full potential.
Have any questions or comments?
Click on graph to expand
Source: http://www.worldagweather.com/
Click on graph to expand
Source: http://www.worldagweather.com/
Click on graph to expand
Data sources: USDA, Reuters, Mecardo
Categories
Have any questions or comments?
Grain options as a hedging tool
After spending much of the three months over harvest doing very little, volatility is back in the wheat market. Canola has been on a rollercoaster
The hits keep coming
The fact that the wheat market has been relatively unchanged week on week doesn’t imply the market has been without volatility. After a slightly bearish
Who is getting sick of tariff talk?
President Trump has been at it again, talking about imposing tariffs on all agricultural imports, (albeit via the X platform). This leads to all sorts
The art of the deal
Another tumultuous week in wheat – and indeed commodities and stocks as a whole. President Trump rolled out 25% broad-based tariffs on Canada and Mexico
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
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.
MEET THE TEAM
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.
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.