Adding to the market’s concern, dry conditions contributed to low river levels, making barge navigation difficult. This was at a time when China was an active buyer of Brazilian beans and meal. As such, China has switched origins to the US which lit the fire under the CBOT soybean market. What does wheat have to do with soybeans? No direct correlation other than in ag markets, a rising tide tends to lift all boats.
Fast forward a few days, the rain forecast across Brazil gained traction, and the tide turned lower. The same old market drivers came to the forefront again, leaving the wheat market little option other than to revert to a well-worn path.
Australian new season grain is starting to hit the waves. Much of the early business will be barley headed for China. It is thought (hoped) that China will buy most if not all of our exportable surplus of barley, marking a welcome return to our most im-portant trading partner. This provides excellent underlying demand in the barley market and should be a positive influence on prices after the harvest surge.
Argentina, the southern hemisphere’s other problem child, also clipped their wheat outlook. The Rosario Grain Exchange further cut production to 13.5mmt, with the USDA and Buenos Aires Exchange both sticking to 15.5mmt and 14.7mmt respec-tively. Early harvest points to yields achieving 1.25t/ha, whereas to achieve USDA produc-tion estimates, yields need to average 2.5t/ha. Yields are expected to improve as harvest moves south.
The wheat market is in a funny place. It can’t shake the downtrend due to plentiful nearby supply. The demand side of the equation should eventually add some much-needed balance, with Egypt in the market for 12mmt (+7% Y on Y) and Chinese trade relations improving. In the latest IGC report, total demand is expected to increase by 2%, mostly on gains in feed and industrial uptake. World stocks at the end of 2023/24 are seen dropping by 2% to 585mmt, a seventh consecutive year of tightening, including reductions for wheat (-6%), barley (-11%), and oats (-50%).
Soybeans pull the plug
Next week
The market will be heavily focused on the forecast rain in Brazil and whether it falls where needed. Australian rain is also forecast along the East Coast which would help summer crop sowing in Southern QLD and Northern NSW, however, it could be poor timing for farmers trying to get their winter crops off.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Data sources: Reuters, International Grains Council, Next Level Grain Marketing, Mecardo
Categories
Have any questions or comments?
Russia, USDA and a Rock wall
Picture if you will, a rock climber, gradually, step by step, grasp by grasp, pulling themselves up the face of a sheer rock wall. This
Contrasting crop production
The seasons in the north and south couldn’t be more different in terms of rainfall and crop progression. While somewhat overshadowed by market movements, the
China’s canola curve ball
The wheat market has enjoyed something of a bounce this week. Having briefly touched multi-year lows of 525c/bu for the Dec ’24 contract last week,
Canola resisting the big soybean crop
The United States Department of Agriculture is forecasting a record soybean crop in the US, as large plantings and good growing conditions continue to see
Want market insights delivered straight to your inbox?
Sign up to the mailing list to get regular updates to new analysis and market outlooks
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.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
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.