Chicago wheat (CBOT) has bounced around on either side of unchanged this week as market participants seem unsure about tonight's USDA report. This report is thought to be a price mover as the USDA will provide some ground-truthed yield data on corn and soybeans, but it will also look to revise global wheat production. Southern Hemisphere production will be in the spotlight as previous Australian estimates of 31mmt now look to be underwater, and conditions in Argentina look very promising.
Futures remain stuck near contract lows as Northern Hemisphere harvests wrap up and global supply becomes clearer. Russian FOB values continue to slide in search of demand, dropping from US$240 to US$225 over the past fortnight. Meanwhile, Australia’s outlook has improved markedly, and Argentina’s crop is in excellent condition (93% rated good-to-excellent), setting up strong Southern Hemisphere output. With few production risks in sight, the market tone is sideways to lower.
Attention is shifting to demand, where sluggish export pace is weighing on sentiment. EU-27 wheat exports are running 38% behind last year at just 2.7 MMT, while US shipments are 21% ahead at 12.4 MMT. Without fresh demand catalysts, the market lacks momentum.
Looking ahead, EU and Black Sea winter wheat planting will come into focus. Early talk of dryness in Russia echoes last year’s pattern – though that still produced a robust 86 MMT crop.
Winnipeg Canola (ICE) has bounced off its lows this week. The catalyst is thought to be a widespread frost that hit much of the Canadian Prairies. With many crops mature and some already in the bin, it is unclear exactly how much damage was done – if any. It suggests more of a headline-driven move than a fundamental shift.
On the policy front, several senior Canadian politicians met with their Chinese counterparts to try to find a solution to the canola import tariff. After the talks, it was agreed that the ‘temporary’ tariff measures will remain temporary in what is seen as an encouraging sign for Canadian canola producers.
Next week
The key question remains: where is the demand? With Russian FOB values tumbling, the market risks a repeat of last year when Russian wheat dominated export flows. Competitors must either sharpen prices or wait for supplies to tighten.
The wheat complex has experienced a rather choppy few days, with systematic profit-taking shifting some of the heat out of the supply-squeeze-driven buoyancy we are
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Wheat Drifts Sideways as USDA Looms
Futures remain stuck near contract lows as Northern Hemisphere harvests wrap up and global supply becomes clearer. Russian FOB values continue to slide in search of demand, dropping from US$240 to US$225 over the past fortnight. Meanwhile, Australia’s outlook has improved markedly, and Argentina’s crop is in excellent condition (93% rated good-to-excellent), setting up strong Southern Hemisphere output. With few production risks in sight, the market tone is sideways to lower.
Attention is shifting to demand, where sluggish export pace is weighing on sentiment. EU-27 wheat exports are running 38% behind last year at just 2.7 MMT, while US shipments are 21% ahead at 12.4 MMT. Without fresh demand catalysts, the market lacks momentum.
Looking ahead, EU and Black Sea winter wheat planting will come into focus. Early talk of dryness in Russia echoes last year’s pattern – though that still produced a robust 86 MMT crop.
Winnipeg Canola (ICE) has bounced off its lows this week. The catalyst is thought to be a widespread frost that hit much of the Canadian Prairies. With many crops mature and some already in the bin, it is unclear exactly how much damage was done – if any. It suggests more of a headline-driven move than a fundamental shift.
On the policy front, several senior Canadian politicians met with their Chinese counterparts to try to find a solution to the canola import tariff. After the talks, it was agreed that the ‘temporary’ tariff measures will remain temporary in what is seen as an encouraging sign for Canadian canola producers.
Next week
The key question remains: where is the demand? With Russian FOB values tumbling, the market risks a repeat of last year when Russian wheat dominated export flows. Competitors must either sharpen prices or wait for supplies to tighten.
Have any questions or comments?
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Data sources: Reuters, Sask Wheat, USDA, 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.
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.