Are we seeing seasonal lows? The wheat market has been under intense pressure in recent weeks as the Northern Hemisphere harvest, technical selling and recent data all showing building carry-out stocks were released.
We are now heading into the tail end of the winter wheat harvest and
the start of the corn pollination period. There are a few rumblings about a
hot, dry couple of weeks in Canada which has already tipped some of the cereals
and canola crops.
The worst impact is in South West Saskatchewan and Central Alberta regions. The last Saskatchewan crop
report said the Spring wheat crop is considered 90% good to excellent, although this may not be representative of the current crop conditions.
Neighbouring Alberta fell 5% points to 73%. The canola market in ICE (Winnipeg)
has rallied strongly on the potential for lost production in the past couple of
days. The worst of the weather appears over for now, so we may see any risk
premium removed.
Similarly, hot, dry weather in the Black Sea is seen as denting the
hopes of the corn crop. Ukraine’s ASAP Agri cut forecast corn production by 5mmt. Russian
barley exports are expected to drop to 3.5mmt from 8.3mmt last year, as frost
and drought curb production.
Production problems are also seen in Western Europe and some of the
Balkan States (Bulgaria, Romania). The very wet season experienced in France
has cut production and decreased quality. This has led to a rally in EU milling
wheat values to the extent that US HRS wheat is making its way into Italy.
Importer demand has increased, coinciding with the fall in prices.
Tender activity included GASC (Egypt) buying 770kmt, out of 2.2mmt offered.
Jordan surfaced for 120kmt, and South Korea bought a boat of US wheat. China also has been active,
buying around 1.5mmt in June, up 50% on last year.
US politics is again taking centre stage. The abdication of President
Biden has been seen favourably by international markets. The tensions over the
possibility of another Trump-led trade war seemed to have eased investors’ minds and seen a bump in commodity prices. The USD, so often a safe
haven asset, has seen investors head back to the US currency as the chaos of
the past few weeks seems to have calmed down.
Next week
Row crops (corn and beans) will now take over the reins of the market as we head into the key pollination and pod-setting period. Keep an eye on the weather in the US corn belt and in South America for further price direction.
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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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Wheat bus looking for a new driver
We are now heading into the tail end of the winter wheat harvest and the start of the corn pollination period. There are a few rumblings about a hot, dry couple of weeks in Canada which has already tipped some of the cereals and canola crops.
The worst impact is in South West Saskatchewan and Central Alberta regions. The last Saskatchewan crop report said the Spring wheat crop is considered 90% good to excellent, although this may not be representative of the current crop conditions. Neighbouring Alberta fell 5% points to 73%. The canola market in ICE (Winnipeg) has rallied strongly on the potential for lost production in the past couple of days. The worst of the weather appears over for now, so we may see any risk premium removed.
Similarly, hot, dry weather in the Black Sea is seen as denting the hopes of the corn crop. Ukraine’s ASAP Agri cut forecast corn production by 5mmt. Russian barley exports are expected to drop to 3.5mmt from 8.3mmt last year, as frost and drought curb production.
Production problems are also seen in Western Europe and some of the Balkan States (Bulgaria, Romania). The very wet season experienced in France has cut production and decreased quality. This has led to a rally in EU milling wheat values to the extent that US HRS wheat is making its way into Italy.
Importer demand has increased, coinciding with the fall in prices. Tender activity included GASC (Egypt) buying 770kmt, out of 2.2mmt offered. Jordan surfaced for 120kmt, and South Korea bought a boat of US wheat. China also has been active, buying around 1.5mmt in June, up 50% on last year.
US politics is again taking centre stage. The abdication of President Biden has been seen favourably by international markets. The tensions over the possibility of another Trump-led trade war seemed to have eased investors’ minds and seen a bump in commodity prices. The USD, so often a safe haven asset, has seen investors head back to the US currency as the chaos of the past few weeks seems to have calmed down.
Next week
Row crops (corn and beans) will now take over the reins of the market as we head into the key pollination and pod-setting period. Keep an eye on the weather in the US corn belt and in South America for further price direction.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Data sources: ASAP Agri, Reuters, CRM Agri, 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.