In the past week, the wheat market looked to have taken a breather from the heavy bearish trend that had set in over the past couple of weeks. The fact that we saw several large tenders emerge from big buyers, Jordan 500kmt and Egypt 815kmt, offered some hope that we had turned a corner.
Last night the USDA released their June acreage report. I don’t really know what the market was looking for, but they didn’t find it. Corn and wheat matched analysts predictions and should be considered neutral, but the news was met with a collapse in both markets, down 34ȼ/bu and 43ȼ/bu respectively.
It is hard to pinpoint the exact reason why the market reacted so negatively last night. The remarkable thing is that wheat is now approaching pre-war levels and yet, nothing has been resolved. On the face of it, Russia is producing a huge crop but will face challenges in meeting export expectations. The Russian farmer will be reluctant sellers due to the exorbitant export tax, but with a large crop, will still offer up some volume. Case in point, the Egyptian tender mentioned above, should have been dominated by Russian wheat, but instead, only 3 cargoes (180kmt) were offered. This is Russia’s time to shine, but sanctions and logistics are going to create some headwinds.
Possibly troubling the market is news that Ukrainian grain is flowing out of Berdyansk and Mariupol from within the Azov Sea. The grain is moving under a Russian flag, despite Moscow’s assurance that no Ukrainian grain has been taken.
The other pillar of support is on shaky ground. US weather is fairly benign for the row crops, with both corn and bean areas expecting good rain this week ahead of any heat. Early reports of problems in the Brazilian safrinha corn crop also appear to have been over stated. Early harvest results would indicate that a record crop remains on the cards.
Demand has been slow to materialise this year. As mentioned above, we saw sizeable tenders announced this week but as a whole, the big end users remain behind schedule with their buying patterns. Last night’s dip may provide the catalyst for another round of buying. The pace of demand and the ability of Russia to meet that demand will be key going forward.
The week ahead….
Unpredictable, erratic, unstable, counter intuitive. My thesaurus is running out of adjectives to describe this market. A worsening macro-economic environment is adding negative sentiment across all commodities, but eventually the realities of inelastic demand and tight supply “should” see prices stabilise.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released its December Crop Report last week, and it came with some serious bumping
Another ‘geopolitic’ type of week, with little fundamental news but lots of political intrigue to keep the market ticking over. News that the US President
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Riddle me this…
Last night the USDA released their June acreage report. I don’t really know what the market was looking for, but they didn’t find it. Corn and wheat matched analysts predictions and should be considered neutral, but the news was met with a collapse in both markets, down 34ȼ/bu and 43ȼ/bu respectively.
It is hard to pinpoint the exact reason why the market reacted so negatively last night. The remarkable thing is that wheat is now approaching pre-war levels and yet, nothing has been resolved. On the face of it, Russia is producing a huge crop but will face challenges in meeting export expectations. The Russian farmer will be reluctant sellers due to the exorbitant export tax, but with a large crop, will still offer up some volume. Case in point, the Egyptian tender mentioned above, should have been dominated by Russian wheat, but instead, only 3 cargoes (180kmt) were offered. This is Russia’s time to shine, but sanctions and logistics are going to create some headwinds.
Possibly troubling the market is news that Ukrainian grain is flowing out of Berdyansk and Mariupol from within the Azov Sea. The grain is moving under a Russian flag, despite Moscow’s assurance that no Ukrainian grain has been taken.
The other pillar of support is on shaky ground. US weather is fairly benign for the row crops, with both corn and bean areas expecting good rain this week ahead of any heat. Early reports of problems in the Brazilian safrinha corn crop also appear to have been over stated. Early harvest results would indicate that a record crop remains on the cards.
Demand has been slow to materialise this year. As mentioned above, we saw sizeable tenders announced this week but as a whole, the big end users remain behind schedule with their buying patterns. Last night’s dip may provide the catalyst for another round of buying. The pace of demand and the ability of Russia to meet that demand will be key going forward.
The week ahead….
Unpredictable, erratic, unstable, counter intuitive. My thesaurus is running out of adjectives to describe this market. A worsening macro-economic environment is adding negative sentiment across all commodities, but eventually the realities of inelastic demand and tight supply “should” see prices stabilise.
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Data sources: Dartboard Commodities, Reuters, USDA
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A good WA spring driving crop production
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released its December Crop Report last week, and it came with some serious bumping
Price pressure as production picks up
A week or so ago, I wrote how ‘big crops get bigger’. True to form, the trend continues. This week, StatsCan updated their production data
A slow harvest and drifting prices
Summer is here, yet it has been hard to find spring heat in the south, let alone summer. Cool, wet conditions continue to delay harvest
Thanksgiving caps a flat week
Another ‘geopolitic’ type of week, with little fundamental news but lots of political intrigue to keep the market ticking over. News that the US President
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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.
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.
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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.