Cornfield

The bullish news is all unwinding, with a huge Russian grain crop expected and the weather improving in the US. Elsewhere China cancels a cargo of corn, causing cereal prices to fall, meanwhile, the EU is busy banning Ukrainian grain imports as local producers stage protests.

It was a terrible week for wheat, with DEC-23 CBOT prices plummeting close to 7%, down to AUD$374/ton. Over the course of April so far, CBOT wheat prices have fallen 11%, clocking up the largest monthly decline seen since November 2022. In tandem, US corn prices have fallen to levels not seen since June 2022, indicating that there is significant pressure on the cereal complex across multiple commodities.

Locally in Australia, selling pressure from producers for cash wheat has been light with sowing activities taking the front seat for the time being, with the less attractive prices in the market compared to recent times not helping to encourage supply. Meanwhile, buyers have shown little urgency to add to volumes and accumulate wheat resulting in a market that is drifting sideways.

Russia is doggedly reiterating the May 18th deadline for the end of the current grain corridor deal in the black sea, which has resulted in uncertainty for trading out of the black sea, and buyers are increasingly turning to alternative origins to mitigate the risk. Russia’s complaint is that the Ukrainian end of the deal is working smoothly, but in practice, Russian exports of grain and fertiliser are being impeded by sanctions on its payments, logistics, and insurance industries. One of the five key demands Russia has listed involves the full unconditional reconnection of the Russian Agricultural Bank to the SWIFT payment system. Russia’s position appears more determined, with Ukraine concerned that an end to the deal is not just an empty threat this time around.

Poland, Hungary, Bulgaria, and Slovakia have slapped an embargo upon Ukrainian grain imports till June due to a perceived glut of Ukrainian grain flooding central Europe, suppressing prices for local producers. While the UE commission has rejected the unilateral bans, there is no indication of significant consequences being levelled against them as a result. The broader implication of the change is that this move is a sign that support for Ukraine within the EU is beginning to fracture. The core problem has been that the intention of tariff-free entry of Ukrainian grain into the EU was for it to be subsequently re-exported into other countries, in practice it has remained stranded, due to logistics issues.

China’s sudden cancellation of two US corn orders totalling 560,000 tonnes this week has impacted the outlook for US corn, with the expectations that China has pulled back from US origins in preference to looking towards Brazil, which is tipped to produce a more ample, and price competitive crop this year.

Weather conditions in the US are favourable for planting corn & soybeans, with forecasts of solid rains on the US plains underpinning expectations for higher production. As a result, the market is becoming wise to the fact that competition to offload production may be stiff in the coming season, putting downward pressure on prices.  In addition, the latest Statistics forecast has Canadian farmers currently tipped to plant 27 million acres of wheat, which, if it happens, will be the largest area of wheat in 22 years.

Next week

The market’s attention is mostly focused on developments in US weather and watching to see if China cancels more orders of US corn, as well as monitoring any progress regarding ongoing negotiations surrounding the black sea grain corridor.

Have any questions or comments?

We love to hear from you!

Click on graph to expand

Click on graph to expand

Data sources: Refinitiv, Profarmer, Mecardo

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

Jack tours Russia

To start the week, the wheat market got a very nice little push courtesy of Russian frosts, a bullish USDA report and technical short covering.

Read More »
Wheat plants _ image
Grains & Oilseeds

Benign May WASDE

It’s May and the new season World Agricultural Supply and Demand Estimates (WASDE) from the United States Department of Agriculture (USDA) is out. The WASDE

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
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.