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.

Have any questions or comments?

We love to hear from you!

Click on graph to expand

Click on graph to expand

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

USDA offers up a vanilla slice

Last night, the market rolled back on itself after the USDA printed a very vanilla April WASDE (World Ag Supply & Demand Estimates) report. With

Read More »
Grains & Oilseeds

USDA uncovers a big hole

Last week, I finished off the weekly market comment by saying “ Unless the USDA surprises with a sharper-than-expected reduction in corn area, I suspect

Read More »
Canola field
Grains & Oilseeds

Long term crop forecasts

It is hard enough forecasting commodity production for the coming season, let alone any further. Regardless, The Australian Bureau of Agricultural and Resource Economics and

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.