Last week’s USDA Agricultural Outlook Forecast (AOF) certainly tipped cold water on agricultural markets. While the production figures printed are little more than a best ‘guesstimate’, it changed the sentiment around pricing. In short, the report indicated a rebuilding of stocks across the three agricultural commodities. Market participants used this as an excuse to sell off some of their positions, especially in corn which had built a large long (bought) position.
Wheat has also been crunched after the Chinese voiced their support for the renewal of the Black Sea Grain Initiative (Corridor). This was one of the key principles of a 12-point ceasefire plan offered by Beijing to try and ease tensions in the Black Sea. As a net importer of agricultural goods, it is in China’s best interest that the Grain Corridor is continued. The market took the news that Russia’s chief ally was advocating for a ceasefire as a fait de accompli that the corridor would be renewed.
Moscow, however, loves to spin a good story. Still unhappy with Western sanctions and so-called political interference in their export program, the Russians have come out and said they will walk away from the deal if their agricultural sector is overlooked. It should be noted, Western sanctions are not imposed on Russian-origin food and feed commodities but are indirectly through shipping and insurance.
Over the next couple of months, the agricultural market will get a much clearer idea of US farmers’ sowing intentions. With corn and soy stocks relatively tight, I suspect we can assume there will be some stiff competition to ‘buy’ acres. Corn looks like it should be the biggest winner due to decreasing input costs and a corn belt that has seen good winter moisture.
Wheat will likely continue to trade in a relatively narrow band. Russia continues to set the bar low with cheap and abundant wheat and the Australian export program is running hot. There are a few areas of concern including a dry Hard Red Winter (HRW) wheat area, in particular Kansas and Texas which have a crop rating of poor to very poor at 51% and 49% respectively. Western Europe has had a dry end to winter, and while the crops there have avoided any frost damage, there is a building moisture deficit, especially in France. There is plenty of time left for Spring rains to bring these crops home.
Next week
It remains an unpredictable and ultimately volatile market. After the past week’s losses, the wheat market looks oversold. How much it can recover will depend on Spring weather and geopolitics.
Another week, another very mixed result. Last week, Middle Eastern politics drew the market’s attention, this week it’s all about the weather. Russia looked to
The worm seems to have turned somewhat in the grain and oilseed complex. While there is some short-term support coming from yet more geopolitical unrest,
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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.
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Wheat in the crossfire
Wheat has also been crunched after the Chinese voiced their support for the renewal of the Black Sea Grain Initiative (Corridor). This was one of the key principles of a 12-point ceasefire plan offered by Beijing to try and ease tensions in the Black Sea. As a net importer of agricultural goods, it is in China’s best interest that the Grain Corridor is continued. The market took the news that Russia’s chief ally was advocating for a ceasefire as a fait de accompli that the corridor would be renewed.
Moscow, however, loves to spin a good story. Still unhappy with Western sanctions and so-called political interference in their export program, the Russians have come out and said they will walk away from the deal if their agricultural sector is overlooked. It should be noted, Western sanctions are not imposed on Russian-origin food and feed commodities but are indirectly through shipping and insurance.
Over the next couple of months, the agricultural market will get a much clearer idea of US farmers’ sowing intentions. With corn and soy stocks relatively tight, I suspect we can assume there will be some stiff competition to ‘buy’ acres. Corn looks like it should be the biggest winner due to decreasing input costs and a corn belt that has seen good winter moisture.
Wheat will likely continue to trade in a relatively narrow band. Russia continues to set the bar low with cheap and abundant wheat and the Australian export program is running hot. There are a few areas of concern including a dry Hard Red Winter (HRW) wheat area, in particular Kansas and Texas which have a crop rating of poor to very poor at 51% and 49% respectively. Western Europe has had a dry end to winter, and while the crops there have avoided any frost damage, there is a building moisture deficit, especially in France. There is plenty of time left for Spring rains to bring these crops home.
Next week
It remains an unpredictable and ultimately volatile market. After the past week’s losses, the wheat market looks oversold. How much it can recover will depend on Spring weather and geopolitics.
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Data sources: Reuters, Next Level Grain Marketing, World Ag Weather, Mecardo
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Time to cut the BOM some slack
Another week, another very mixed result. Last week, Middle Eastern politics drew the market’s attention, this week it’s all about the weather. Russia looked to
Moving in the right direction
The worm seems to have turned somewhat in the grain and oilseed complex. While there is some short-term support coming from yet more geopolitical unrest,
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Exchange rates helping wheat values
The exchange rate has been in the news lately, with the Australian dollar falling to a six-month low last week. Given this, we thought it
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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.
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.
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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.