The USDA released their WASDE report last Wednesday night which while slightly bearish for wheat, did not hold too many surprises. The US saw slight increases in wheat, mainly in the relatively small HRS class. Perhaps surprisingly the USDA left Russian production at 76mmt, whereas Rusagrotrans (RUS analyst) has it closer to 81mmt. Aussie production also left at 26mmt, perhaps resisting the temptation to lift it to 28-30mmt, remembering sagely that it is only early August.
Other key points are as follows:
Global production is lower by 3.3mmt to 766mmt (US +0.4, EU -4, RU +1.5, Braz +1.1, Arg -0.5, Ukr +0.5, Kaz -1.0). Global consumption is lower by 1.45mmt to 750mmt (EU -1.0) based on reduced demand due to COVID-19. Global ending stocks are higher by 1.95mmt to 316mmt (EU +2) with major exporter stocks higher by 1.4 to 62mmt. As above, it is prudent to remember that Chinese stocks at 163mmt or 51% of global stocks, India stocks at 31mmt or ~10% of global stocks.
Global wheat prices appear to be buckling under the weight of the Northern Hemisphere harvest. It is not unusual that the market would follow the path of least resistance in the absence of any major production problem.
With Russia again being the pace setter for prices, it will be interesting to see what happens if there are any logistical issues getting the crop to port. The big yields in the central key producing region of the Volga have been instrumental in building production late in the Russian harvest. This region can experience harsh winters which could impact the transport of grain to the southern ports on the Black Sea. Any hold up may result in a short spike in prices as importers switch origins to maintain supply.
Attention will soon switch to Australian and Argentinian production. The key markets of Indonesia and SE Asia will be hotly contested this year with Australia looking to reclaim lost market share.
USDA confirms ample stocks
The USDA released their WASDE report last Wednesday night which while slightly bearish for wheat, did not hold too many surprises. The US saw slight increases in wheat, mainly in the relatively small HRS class. Perhaps surprisingly the USDA left Russian production at 76mmt, whereas Rusagrotrans (RUS analyst) has it closer to 81mmt. Aussie production also left at 26mmt, perhaps resisting the temptation to lift it to 28-30mmt, remembering sagely that it is only early August.
Other key points are as follows:
Global production is lower by 3.3mmt to 766mmt (US +0.4, EU -4, RU +1.5, Braz +1.1, Arg -0.5, Ukr +0.5, Kaz -1.0). Global consumption is lower by 1.45mmt to 750mmt (EU -1.0) based on reduced demand due to COVID-19. Global ending stocks are higher by 1.95mmt to 316mmt (EU +2) with major exporter stocks higher by 1.4 to 62mmt. As above, it is prudent to remember that Chinese stocks at 163mmt or 51% of global stocks, India stocks at 31mmt or ~10% of global stocks.
Global wheat prices appear to be buckling under the weight of the Northern Hemisphere harvest. It is not unusual that the market would follow the path of least resistance in the absence of any major production problem.
With Russia again being the pace setter for prices, it will be interesting to see what happens if there are any logistical issues getting the crop to port. The big yields in the central key producing region of the Volga have been instrumental in building production late in the Russian harvest. This region can experience harsh winters which could impact the transport of grain to the southern ports on the Black Sea. Any hold up may result in a short spike in prices as importers switch origins to maintain supply.
Attention will soon switch to Australian and Argentinian production. The key markets of Indonesia and SE Asia will be hotly contested this year with Australia looking to reclaim lost market share.
Next week
We have seen over 30c/bu wiped from the Dec ’20 wheat contract this month. It is hard to argue a bullish rebound with Aussie production stabilising after a dry couple of months.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Data sources: Rusagrotrans, SovEcon, USDA, Next Level Grain Marketing, Mecardo
Categories
Have any questions or comments?
Wheat finds its feet
Wheat is doing something highly unusual. It is going up. Having withered on the vine for the best part of 12 months, wheat has finally
A Look ahead for grain and oilseed markets
This year has been one of relatively consistent price declines for grain and oilseed markets. Coming out of a season where we reached record levels
Wheat weaves its tangled web
Did Australian weather just move the market’s needle? After weeks of the market edging lower and lower (we hit multi-year lows earlier this week with
Barley shows upside as harvest is held up
2023 Winter crop harvest has stalled with rainfall on the East Coast dampening progress. There is still plenty of grain and oilseed to still come
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.