Without the usual run of USDA trade data to generate headlines, the wheat market has been rela-tively subdued this week. In the absence of meaningful fundamentals, politics has once again tak-en the wheel in driving market direction.
Early in the week, attention was focused on renewed trade tension between the US and China. Following last week’s spat over rare earths and increased tariffs, both sides have since dialled down the rhetoric. The White House and Beijing appear to be testing a more conciliatory tone, with Trump and Xi now set to meet at the upcoming APEC summit in South Korea in two weeks’ time. Soybeans and rare earths will headline discussions, but any soybean-related deal may come too late for US growers, as China is reportedly covered through December/January, and South American new-crop beans will hit the market soon after. Trump wants a return to pre-trade dispute volumes; China insists it can buy elsewhere. Trump’s playing checkers, China’s playing chess.
Overnight, the US announced fresh sanctions on major Russian oil companies after failing to draw Putin to the negotiation table.The sanctions aim to put more pressure on Russia in an attempt to bring about resolution to the conflict with Ukraine and to deter nations attempting to bypass existing restrictions. Crude oil prices jumped in response, sparking a broader rally across commodities.
With the USDA still offline, several private analysts have stepped in to fill the information vacuum. Zaner Ag Hedge has been compiling export estimates based on trader surveys. By their account, corn is flying out the door, with exports believed to be between 49% and 62% above last year’s level. Wheat too, is running 14% to 22% above last year’s level. At this pace, wheat exports are already 57% of the USDA export forecast, with seven months left in the marketing year. Poor old soybeans are lagging badly, trending somewhere between 27% and 42% below last year and marking a 17-year low.
The Russian wheat export tax was reduced from US$6/t to $4/t, making Russian wheat that much more competitive on the world stage. October exports have picked up, indicating that demand is there. Some of a recent 600kmt Algerian tender was awarded to France, but notably Argentina also picked up a decent volume. It points to how cheap Argy wheat is that it can compete all the way across the globe compared to the relatively short hop from Europe.
Next week
It’s the time of year when market focus transitions from Northern Hemisphere production prospects to demand dynamics. Import demand is starting to emerge, with recent major purchases reported from Algeria, Egypt and Saudi Arabia. Continued market support will need to come from the demand side, as the supply outlook is well understood, with both Australian and Argentinean crop prospects looking favourable.
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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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Trade tensions, sanctions and silence from the USDA
Early in the week, attention was focused on renewed trade tension between the US and China. Following last week’s spat over rare earths and increased tariffs, both sides have since dialled down the rhetoric. The White House and Beijing appear to be testing a more conciliatory tone, with Trump and Xi now set to meet at the upcoming APEC summit in South Korea in two weeks’ time. Soybeans and rare earths will headline discussions, but any soybean-related deal may come too late for US growers, as China is reportedly covered through December/January, and South American new-crop beans will hit the market soon after. Trump wants a return to pre-trade dispute volumes; China insists it can buy elsewhere. Trump’s playing checkers, China’s playing chess.
Overnight, the US announced fresh sanctions on major Russian oil companies after failing to draw Putin to the negotiation table.The sanctions aim to put more pressure on Russia in an attempt to bring about resolution to the conflict with Ukraine and to deter nations attempting to bypass existing restrictions. Crude oil prices jumped in response, sparking a broader rally across commodities.
With the USDA still offline, several private analysts have stepped in to fill the information vacuum. Zaner Ag Hedge has been compiling export estimates based on trader surveys. By their account, corn is flying out the door, with exports believed to be between 49% and 62% above last year’s level. Wheat too, is running 14% to 22% above last year’s level. At this pace, wheat exports are already 57% of the USDA export forecast, with seven months left in the marketing year. Poor old soybeans are lagging badly, trending somewhere between 27% and 42% below last year and marking a 17-year low.
The Russian wheat export tax was reduced from US$6/t to $4/t, making Russian wheat that much more competitive on the world stage. October exports have picked up, indicating that demand is there. Some of a recent 600kmt Algerian tender was awarded to France, but notably Argentina also picked up a decent volume. It points to how cheap Argy wheat is that it can compete all the way across the globe compared to the relatively short hop from Europe.
Next week
It’s the time of year when market focus transitions from Northern Hemisphere production prospects to demand dynamics. Import demand is starting to emerge, with recent major purchases reported from Algeria, Egypt and Saudi Arabia. Continued market support will need to come from the demand side, as the supply outlook is well understood, with both Australian and Argentinean crop prospects looking favourable.
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Data sources: Reuters, Zaner Ag, Next Level Grain Marketing, Mecardo
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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.
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.