Wheat plants _ image

For all the doomsday prophecies around the outlook for commodities, this week wheat managed to stage something of a recovery, albeit a modest bounce. The heavy selling that followed the release of the USDA Outlook data appears now to have been arrested.

As we roll into March, we will start to enter into something of a weather market. The state of  Northern Hemisphere winter sown crops and the Spring sowing pace will become part of the regular vernacular. Already the spotlight is starting to focus on a number of key countries.


French winter soft wheat is in relatively poor condition at only 68% good to excellent, far below the average 85% and on par with the disastrous 2020 crop. The crop has battled with excessive moisture since seeding and is already looking at a 7% reduction in area. Coupled with this, the spring seeding progress is also delayed due to the persistent moisture.


The Canadian Prairies on the other hand remain stubbornly dry. Snow cover remains sparse meaning that this year’s crop will be heavily dependent on in-crop rainfall.  Seeding will begin in late April through May, so there remains plenty of time for moisture to improve ahead of seeding.


There is also a fair bit of chatter about the state of the safrinha (second) corn crop in Brazil. While moisture is described as adequate for the current crop stage, the total accumulation is running well behind average. Seeding is running at 25% complete, fractionally behind average.  This will become more of a story if the seeding pace falls well behind as seasonal rains follow a strong correlation to the calendar.


The anchor around wheat’s neck is linked to another large crop coming from Russia and the propensity for fund managers to sell wheat at every opportunity. The record large net sold (short) position in wheat and corn could become vulnerable if any of the red flags mentioned above become a bigger story. 

Next week

It feels like the market is not yet concerned about ‘potential’ problems and will instead focus on current issues like demand and the strong competition being waged for consumer business.

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Click on graph to expand

Click on graph to expand

Data sources: USDA, SovEcon, Progressive Farmer, Refinitiv, Mecardo

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