Had you asked me earlier this week where I thought the market was heading, I might have said that it ‘felt’ like it wanted to rally. A succession of production cuts in major exporters as well as slow farmer selling in Russia seemed to keep the market buoyant.
Enter the Russian Bear. The Russian Gov’t’s official statistics service – Rosstat – increased the cropped area for wheat from 28.8mha to 29.4mha, the largest area since the ’70s. This has added roughly 2mmt to the expected wheat production estimate. The breakdown of area shows that 16.8mha is winter wheat and 12.6mha of spring wheat. The increase in yield relative to the increase in area, implies that the increase is in the winter wheat regions (higher yield potential ~3.3t/ha).
While in Russia, the yield penalties associated with the drier southern cropping regions have moderated as expected, as harvest shifts further north. Early yields were tracking ~30% below last year but are on average only ~6% below last year as harvest shifts into the central and northern regions. Combined with the increase in area, Russia is again on track to produce 78-80mmt.
On the back of this news, we could easily speculate that the Russian farmer will let go more of their harvest. They had been reluctant sellers up until now. This has had the desired effect of inflating the cash bids being offered. But with higher yields being reported and a bigger crop overall, we may just see traditional harvest pressure start to weigh on prices.
The US winter wheat harvest is reported to be 81% complete, in line with five-year averages. Quality is reported to be very good, albeit slightly lower than average protein. Row crop (corn and beans) conditions also improved this week to be 72% good to excellent, well ahead of last years rain-soaked crops.
Next week
Looking ahead, we would expect global prices to ease a little as new season grain makes its presence felt.
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Russian Bear spoils the party
Next week
Looking ahead, we would expect global prices to ease a little as new season grain makes its presence felt.
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Click on graph to expand
Data sources: USDA, Next Level Grain Marketing, Rosstat, Reuters
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Jack tours Russia
To start the week, the wheat market got a very nice little push courtesy of Russian frosts, a bullish USDA report and technical short covering.
Benign May WASDE
It’s May and the new season World Agricultural Supply and Demand Estimates (WASDE) from the United States Department of Agriculture (USDA) is out. The WASDE
Weather bingo card
After the relatively quiet last few months where the ag commodity markets have drift-ed lower, the establishment of the weather market has seen a welcome
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Grain and oilseed markets are showing some good old-fashioned spring (in the northern hemisphere) volatility. We know that springtime dryness can grow into real production
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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.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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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.