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).

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. 

Have any questions or comments?

We love to hear from you!

map: 8 day Precipitation forecast, Europe

http://wxmaps.org/outlooks.php

Click on graph to expand

Click on graph to expand

Data sources: USDA, Reuters, SovEcon

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
Grains & Oilseeds

Exporter weather in the spotlight

Grain markets continued to see support last week, with CBOT wheat (Dec’ 20) break-ing through key technical resistance of 600¢/bu. The strength of the rally

Read More »
Percentiles with a background image of hay bales
Cattle

Percentiles – October 2020

Mecardo’s Percentiles update for October 2020. Click below to view the latest report Grains  Oilseeds Sheep and lambs Cattle Wool Dairy Fuel Percentiles are an important

Read More »
Grains & Oilseeds

Black Sea blues

Interesting that the global wheat market is focused on potential production problems next year, and seemingly forgetting about the record 773mmt crop this year. We

Read More »

Don’t have an account with us? Join free.

You can have full premium access to all of our content with a monthly or annual subscription. 

Alternatively, create a free account to access our Insights blog and two free premium article a month!

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
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 issues affecting the agricultural industry. 

WA sheep farmer looking at empty yards, photo by Chantel Mcalister
Research: Impact of the live sheep export moratorium

In this report for LiveCorp and MLA, we consulted with stakeholders in the sheep supply chain to identify the impact of the moratorium on the live sheep export trade.

Image of harvested grain pouring into a chaser bin
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.