Up until last night, the wheat market had traded sideways for the past week having recently lost some of its shine. Demand, which had caused a bubble in pricing, has eased back after some hefty tenders were issued by Egypt and Saudi. China too, while still buying principally US wheat, has taken its foot off the pedal for the time being. It is a case of ‘high prices, fixing high prices’, meaning the price was regard-ed as too expensive.

The catalyst for last nights explosive rally was the USDA’s stocks report.  Corn, beans and to a lesser extent wheat, came in lower than expectations.  This considerably tightened up supply numbers resulting in a near limit up move. It will be interesting to note if the market can hold on to these gains over the next couple of trading days.

Ukraine looks set for a reprieve with rains forecast this week.  With about 6 weeks left in the seeding window, this rain will be very timely as it will allow for good emergence and establishment.  In Russia, winter wheat planting is around 62% complete but the rains are not forecast to be anywhere near as heavy.  This continues to be a flag worth watching.

While in Russia, the 2020 harvest is around 95% complete with 85mmt in the bin.  Russian FOB prices have fallen slightly after about 4 weeks of steadily increasing on high exporter demand and slow farmer selling.  Cash prices for wheat are at record levels so the farmers there are letting their grain go. Perhaps, the fall in oilseed prices (in particular sunflowers -10% in a week) has been a wake-up call that high prices may not be around forever.

Russia may still introduce export quotas’ to maintain a stable domestic price. The AgMin will meet in October to discuss the mechanism which was introduced in May/Jun as a response to the global COVID pandemic.  Exports are seen at 37mmt versus 34mmt last year (SovEcon).

Commodity Conversations

The week ahead….

US wheat is undoubtedly the most expensive in the world.  We suspect that without further bullish inputs, the wheat market will likely slip from these lofty heights due to big global supplies. 

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map: 8 day Precipitation forecast, Europe


Click on graph to expand

Click on graph to expand

Data sources: USDA, Reuters, SovEcon

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