It is a ‘cut and paste’ type of report this week. The wheat market continues to be dragged lower by abundant old crop supplies and the glut of new crop coming in the pipeline.
The market has effectively given back all of the gains made when Russian production was being cut. As the weather moderated and early harvest results gave some confidence that yields were within trade estimates, the wheat market bulls ran out of feed and the bears came out to play.
The USDA released their June WASDE report late last week which didn’t help the bulls either despite lowering global wheat production for the 24/25 season by 7.3mmt.
Most of the decline in production was in Russia, where the wheat crop was lowered by 5mmt to 83mmt, down 8.5mmt from last year (SovEcon have the Russian crop at 80.7mmt). Ukraine’s crop was also lowered to 19.5mmt, down 15% from last year. Global ending stocks were lowered to 252.3mmt, reflecting a 7.3mmt contraction in ending stocks from the previous year.
Demand remains sluggish, with recent tenders getting hammered by cheap old crop stocks from Europe. Having missed out on the GASC and Algerian business, Russian wheat prices again were lowered to find the demand price point.
Early harvest reports paint a better-than-expected picture in the US and Russia. The USDA raised overall wheat yields to 49bu/ac (3.29t/ha) resulting in an increase in total production to 50.6mmt with a resultant increase in exports.
In Krasnodar, Russia’s #2 wheat-producing state, initial yields surprised at 6.1t/ha, well above average and well above expectations. However, initial yields could be very misleading. Farmers will start on their best crops before moving to the paddocks that are known to be damaged or of poorer quality. With 15-30% of the Russian wheat area thought to be affected by frost, expect this initial yield number to deteriorate over time.
It remains a complex market to navigate. Fundamentally, global wheat stocks are getting tight. However, using last year as a template, we also know that Russia has the upper hand when dictating prices in a highly competitive market.
Next week
Unfortunately, prices will continue to drift lower in the short term while old crop remain avail-able and the new crop comes online. As demand gradually chews through these supplies, and we get greater clarity on production, only then will the market bottom out and we hope will stage some sort of recovery.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released its June Crop Report last week. The June Crop Report is the first
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Slippery slide for wheat
The market has effectively given back all of the gains made when Russian production was being cut. As the weather moderated and early harvest results gave some confidence that yields were within trade estimates, the wheat market bulls ran out of feed and the bears came out to play.
The USDA released their June WASDE report late last week which didn’t help the bulls either despite lowering global wheat production for the 24/25 season by 7.3mmt.
Most of the decline in production was in Russia, where the wheat crop was lowered by 5mmt to 83mmt, down 8.5mmt from last year (SovEcon have the Russian crop at 80.7mmt). Ukraine’s crop was also lowered to 19.5mmt, down 15% from last year. Global ending stocks were lowered to 252.3mmt, reflecting a 7.3mmt contraction in ending stocks from the previous year.
Demand remains sluggish, with recent tenders getting hammered by cheap old crop stocks from Europe. Having missed out on the GASC and Algerian business, Russian wheat prices again were lowered to find the demand price point.
Early harvest reports paint a better-than-expected picture in the US and Russia. The USDA raised overall wheat yields to 49bu/ac (3.29t/ha) resulting in an increase in total production to 50.6mmt with a resultant increase in exports.
In Krasnodar, Russia’s #2 wheat-producing state, initial yields surprised at 6.1t/ha, well above average and well above expectations. However, initial yields could be very misleading. Farmers will start on their best crops before moving to the paddocks that are known to be damaged or of poorer quality. With 15-30% of the Russian wheat area thought to be affected by frost, expect this initial yield number to deteriorate over time.
It remains a complex market to navigate. Fundamentally, global wheat stocks are getting tight. However, using last year as a template, we also know that Russia has the upper hand when dictating prices in a highly competitive market.
Next week
Unfortunately, prices will continue to drift lower in the short term while old crop remain avail-able and the new crop comes online. As demand gradually chews through these supplies, and we get greater clarity on production, only then will the market bottom out and we hope will stage some sort of recovery.
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Data sources: Baltic Exchange | Mecardo
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The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released its June Crop Report last week. The June Crop Report is the first
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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.