The wheat market has resumed its strong bearish theme this week as harvest pres-sure, improving US crop conditions and technical selling all combined to push the market lower.
Russian FOB wheat prices continue to slide as exporters try to
stimulate demand. The Russian export program for July shows only 2.5mmt
compared to 4.2mmt the previous year. Not helping is the fact that Russian
protein is below average, trending around 10.5 – 11.5%, instead of the 12.5%
-13.5% they usually achieve. Russian prices have been reported at US$216 FOB,
falling $10/t for the week and now below US SRW wheat offers.
French wheat (as well as barley and rapeseed) is seeing more production cuts as harvest progresses. France AgriMer has reduced the French outlook for wheat to 29.7mmt, the lowest since
2020. Exports have been cut from 10.2mmt to 7.5mmt. Similarly, rapeseed
production has been cut to 3.94mmt, from the 4.2mmt initially forecast. Euronext (MATIF) prices had been rallying independently of CBOT, but
this week fell in sympathy with CBOT.
There is a lot of information coming at the market with the Northern
Hemisphere harvest in full swing. The size and quality are still an unknown and as such, we can expect the volatility to remain.
The market will soon turn its attention to the US corn and bean crops.
Weather conditions have been generally favourable with small areas experiencing
extremes at either end of the wet/dry spectrum. To put this in context, only 7%
of the US corn area is experiencing ‘drought’ compared to 64% this time last year. A big US corn crop and building global supplies will act as an anchor for wheat
prices. Cheap and plentiful, corn is
readily replacing wheat in the SE Asian feed market.
Overall, global wheat stocks are expected to shrink but the increases
in Australian and Canadian production are not expected to offset the declines
in Russian and French yields. The sphere of influence that the Black Sea has
held should start to dissipate as we head into 2025, but until then, the
market looks to be facing the same sort of trade headwinds that we experienced
in the second half of last year.
Next week
Tonight the USDA will release its July WASDE report. The market will be watching for in-creased US wheat stocks, a boost to US corn and a slight trimming of soybean numbers. Subtle changes are also expected for South American corn and bean crops.
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North hemisphere harvest fuels the bears.
Russian FOB wheat prices continue to slide as exporters try to stimulate demand. The Russian export program for July shows only 2.5mmt compared to 4.2mmt the previous year. Not helping is the fact that Russian protein is below average, trending around 10.5 – 11.5%, instead of the 12.5% -13.5% they usually achieve. Russian prices have been reported at US$216 FOB, falling $10/t for the week and now below US SRW wheat offers.
French wheat (as well as barley and rapeseed) is seeing more production cuts as harvest progresses. France AgriMer has reduced the French outlook for wheat to 29.7mmt, the lowest since 2020. Exports have been cut from 10.2mmt to 7.5mmt. Similarly, rapeseed production has been cut to 3.94mmt, from the 4.2mmt initially forecast. Euronext (MATIF) prices had been rallying independently of CBOT, but this week fell in sympathy with CBOT.
There is a lot of information coming at the market with the Northern Hemisphere harvest in full swing. The size and quality are still an unknown and as such, we can expect the volatility to remain.
The market will soon turn its attention to the US corn and bean crops. Weather conditions have been generally favourable with small areas experiencing extremes at either end of the wet/dry spectrum. To put this in context, only 7% of the US corn area is experiencing ‘drought’ compared to 64% this time last year. A big US corn crop and building global supplies will act as an anchor for wheat prices. Cheap and plentiful, corn is readily replacing wheat in the SE Asian feed market.
Overall, global wheat stocks are expected to shrink but the increases in Australian and Canadian production are not expected to offset the declines in Russian and French yields. The sphere of influence that the Black Sea has held should start to dissipate as we head into 2025, but until then, the market looks to be facing the same sort of trade headwinds that we experienced in the second half of last year.
Next week
Tonight the USDA will release its July WASDE report. The market will be watching for in-creased US wheat stocks, a boost to US corn and a slight trimming of soybean numbers. Subtle changes are also expected for South American corn and bean crops.
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Click on graph to expand
Click on graph to expand
Data sources: Rusgrain Union, AHDB, Commbank, France AgriMer, Reuters, Mecardo
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
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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.