Amid all the fighting and bomb dropping recently, the trade dispute issue had taken a back seat. Well fear no longer. Monday night, the US President issued another round of tariff’ and plenty of threats of further levies to come if he didn’t see some action on improved US trade access.
Japan and South Korea were in his sights, facing potential 25% tariffs on imported goods from those countries. The market reaction was decisive, sinking sharply across most commodities. However, it was arguably the lack of a deal with China within the allotted timeframe that disappointed markets the most. Consider the tariffs aimed at China’s neighbours as merely a shot across the bow—a warning that the US means business.
The latest USDA Acreage Report was released last week. In the report, the USDA raised total wheat seeded area to 45.5 million acres, which was 100,000 acres higher than trade expectations but still reflects a 1% decline in wheat area from the 2024 season.
Most of the decline in seeded area is in spring wheat, where planted acreage is expected to drop by 580,000 acres from last year. This marks the lowest spring wheat area in recent history and should help stabilise prices for higher-protein wheat going forward.
Recent rain has improved conditions across Canada. The dry northern Prairies were the main beneficiaries and saw a hefty premium come out of the ICE canola futures market. Saskatchewan’s spring wheat crop improved by 10 percentage points to 65% in Good/Excellent condition, compared with 86% last year. In Alberta, the condition of the spring wheat crop improved by another 2 points over the week to 62% Good/Excellent, versus 79% last year. However, southern parts of the Prairies continue to see only light rainfall, and moisture deficits are building as we move into summer.
Lower-than-expected yields in the early Russian harvest were the catalyst for some short covering last week. Yields in Rostov and Stavropol were 20–30% lower than last year’s results, highlighting the tough season the region has endured. Nevertheless, analysts continue to edge Russia’s harvest forecast higher, now sitting somewhere between 83–85 MMT. The Russian export tax has essentially been zeroed out in the past week, making Russian exports highly competitive. It remains to be seen whether Russian farmers will be willing sellers at current price levels (US$226 FOB), which are believed to be below the cost of production, especially given lower-than-average yields.
Next week
Immediate focus will be on tonight’s USDA report, which will examine ending stocks, wheat by class, and the expectation that this year’s US corn crop will be a record.
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Trump trade waves
Japan and South Korea were in his sights, facing potential 25% tariffs on imported goods from those countries. The market reaction was decisive, sinking sharply across most commodities. However, it was arguably the lack of a deal with China within the allotted timeframe that disappointed markets the most. Consider the tariffs aimed at China’s neighbours as merely a shot across the bow—a warning that the US means business.
The latest USDA Acreage Report was released last week. In the report, the USDA raised total wheat seeded area to 45.5 million acres, which was 100,000 acres higher than trade expectations but still reflects a 1% decline in wheat area from the 2024 season.
Most of the decline in seeded area is in spring wheat, where planted acreage is expected to drop by 580,000 acres from last year. This marks the lowest spring wheat area in recent history and should help stabilise prices for higher-protein wheat going forward.
Recent rain has improved conditions across Canada. The dry northern Prairies were the main beneficiaries and saw a hefty premium come out of the ICE canola futures market. Saskatchewan’s spring wheat crop improved by 10 percentage points to 65% in Good/Excellent condition, compared with 86% last year. In Alberta, the condition of the spring wheat crop improved by another 2 points over the week to 62% Good/Excellent, versus 79% last year. However, southern parts of the Prairies continue to see only light rainfall, and moisture deficits are building as we move into summer.
Lower-than-expected yields in the early Russian harvest were the catalyst for some short covering last week. Yields in Rostov and Stavropol were 20–30% lower than last year’s results, highlighting the tough season the region has endured. Nevertheless, analysts continue to edge Russia’s harvest forecast higher, now sitting somewhere between 83–85 MMT. The Russian export tax has essentially been zeroed out in the past week, making Russian exports highly competitive. It remains to be seen whether Russian farmers will be willing sellers at current price levels (US$226 FOB), which are believed to be below the cost of production, especially given lower-than-average yields.
Next week
Immediate focus will be on tonight’s USDA report, which will examine ending stocks, wheat by class, and the expectation that this year’s US corn crop will be a record.
Have any questions or comments?
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Data sources: SovEcon, USDA, Bloomberg, Sask Wheat, 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.