After briefly flirting with $9/bu, wheat has again come under pressure to finish the week. Slow US exports and an uncertain economic outlook has managed to reclaim most of the gains seen after the USDA cut US ending stocks below what the market was expecting and continued Black Sea insecurity.
Highlighting the lack of competitiveness, a recent Iraqi milling wheat tender was awarded to Ukraine at US$386/t whereas the US was offered at $551/t (Aussie $490/t). Russia was not included in the list of origins, but is similarly priced to Ukraine. US wheat is also being hurt by a soaring USD which is making US exports more expensive.
Ukrainian exports are picking up pace having shipped 9.2mmt of grain this season (3.2mmt of wheat). This compares to 14.9mmt shipped for the same period one year earlier. The increased confidence in the grain corridor, the fact that the Russian army is being pushed back and the cheap price, is incentivising buyers to purchase Black Sea grains.
After a late and slow harvest, US corn futures are also being pressured lower. At a time that should be the peak of the US export program, logistics are being hindered by very low river levels in the Mississippi which is slowing barge traffic – further exacerbating price pressure. A very dry Autumn period in the Eastern Corn Belt has seen river levels drop to the point of being untrafficable and the forecast does not hold any great promise of rain.
The same dry spell is also causing some concern for farmers sowing winter wheat. The drought that curbed production in last year’s crop, has lingered, to the point where sowing pace is dropping behind average.
The week ahead….
The USDA will post their WASDE report with most expecting a reasonable tightening of global SND. There are a few weather flags including the US HRW belt and dry Argentina which is suffering a prolonged La Niña induced drought. Black Sea will remain a price driver in the short to medium term.
With the feeding sector growing in both beef and lamb industries, along with the traditional large consumers, chicken and pork, there has never been as
This weeks commentary is more about macro-economics and geopolitics that anything directly wheat oriented. Having climbed to over 0.70USc, the AUD has tipped over in
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Slow US demand puts the brakes on wheat
Highlighting the lack of competitiveness, a recent Iraqi milling wheat tender was awarded to Ukraine at US$386/t whereas the US was offered at $551/t (Aussie $490/t). Russia was not included in the list of origins, but is similarly priced to Ukraine. US wheat is also being hurt by a soaring USD which is making US exports more expensive.
Ukrainian exports are picking up pace having shipped 9.2mmt of grain this season (3.2mmt of wheat). This compares to 14.9mmt shipped for the same period one year earlier. The increased confidence in the grain corridor, the fact that the Russian army is being pushed back and the cheap price, is incentivising buyers to purchase Black Sea grains.
After a late and slow harvest, US corn futures are also being pressured lower. At a time that should be the peak of the US export program, logistics are being hindered by very low river levels in the Mississippi which is slowing barge traffic – further exacerbating price pressure. A very dry Autumn period in the Eastern Corn Belt has seen river levels drop to the point of being untrafficable and the forecast does not hold any great promise of rain.
The same dry spell is also causing some concern for farmers sowing winter wheat. The drought that curbed production in last year’s crop, has lingered, to the point where sowing pace is dropping behind average.
The week ahead….
The USDA will post their WASDE report with most expecting a reasonable tightening of global SND. There are a few weather flags including the US HRW belt and dry Argentina which is suffering a prolonged La Niña induced drought. Black Sea will remain a price driver in the short to medium term.
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Data sources: Reuters
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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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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.