grain harvester combine work in field_shutterstock_75432658

The wheat market started off this week with renewed concerns in the Black Sea arena. After violence in the form of terrorist attacks in Russia and retaliations dominated headlines.

Russia is also clamping down on some of its own private export companies After kicking out foreign-owned trading houses and seizing their assets, TD Rif – a major private exporter – has come to the attention of the Russian Ag Ministry. Citing ‘phytosanitary inconsistencies’, the watchdog is threatening to slash the company’s export quota and forcibly sell off their assets. It is thought this might be an attempt to nationalise the wheat export market. It has the potential to slow down exports which in turn could shore up prices. At this point, it is assumed that other private traders will step in to fill the void.

By the end of the week, the wheat market has turned its attention to the upcoming USDA report. The March stocks and acreage report can be a bit of a market mover. Expectations are for corn area to decrease by 3% from last year, wheat down by 4.5% and beans up by 3.5%. Recent history shows that trade guesses and the published data can be miles apart which can lead to some pretty big moves in the market.

The weather market is also showing signs of ramping up. The forecast for the Russian agricultural regions remains dry. While it remains cool, crop production should not be adversely impacted. However, as we move into April, temperatures will quickly start to increase, and any potential stress will build.  SovEcon recently increased their Russian production figures to 94mmt, but the weather remains a flag to watch.

Canada saw some good moisture along the Alberta southern borders in the past week. The rest of the Prairies missed out.  Snow and moisture levels remain patchy ahead of seeding.

From a technical standpoint, the net open interest positions ie the balance of sold and bought futures positions remains overwhelmingly bearish. This means that the fund managers and speculators are still betting on prices going down. This could be a bear trap if we see a sudden escalation in the war or a major production problem emerge.

Next week

Short term I think the market continues a negative trend.  Unless the USDA surprises with a sharper-than-expected reduction in corn area, I suspect the traders are pretty well positioned. Once the report data has been digested, maybe then the focus will resume on what is happening in the Black Sea. Beyond that, weather will drive markets.

Have any questions or comments?

We love to hear from you!

Click on graph to expand

Click on graph to expand

Data sources: Mecardo, 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

USDA offers up a vanilla slice

Last night, the market rolled back on itself after the USDA printed a very vanilla April WASDE (World Ag Supply & Demand Estimates) report. With

Read More »
Grains & Oilseeds

USDA uncovers a big hole

Last week, I finished off the weekly market comment by saying “ Unless the USDA surprises with a sharper-than-expected reduction in corn area, I suspect

Read More »
Canola field
Grains & Oilseeds

Long term crop forecasts

It is hard enough forecasting commodity production for the coming season, let alone any further. Regardless, The Australian Bureau of Agricultural and Resource Economics and

Read More »

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

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 drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
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. 

Image of harvested grain pouring into a chaser bin

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.