wheat header copy

The wheat market has been looking decidedly sick over the past few trading sessions. The Dec ’22 wheat contract has lost 77ȼ/bu for the week. Wheat isn’t the only commodity under pressure, with Dec ’22 corn down 12ȼ/bu and the MATIF rapeseed Nov ’22 contract down a sizeable €54/t.

So where has the shift in momentum come from? It is hard to put a finger on any one event, rather it is the combination of a number of factors. The evolution of the Black Sea grain corridor is perhaps the biggest turning point.  As of last night, another 4 vessels sailed out of the Black Sea bringing the total tally to 25 vessels since the corridor opened.  To start with, most of the vessels were relatively small, but with increasing confidence, we are now seeing larger bulk carriers being booked and making the journey.  This week, bulk carriers will load 70kmt wheat from Ukraine which will mark a milestone event for the under siege country.

Production of wheat is also seen as rising in major exporters.  SovEcon raised Russian production to a record 94.7mmt this week, on the back of the USDA increasing Australian production to 33mmt and Canadian wheat (non-durum) to 28mmt (up 49% from 21/22).  The overall increase is likely minor when considering reduced production in Europe and India.

Canola prices here and abroad have been under pressure as well.  The oilseed complex as a whole initially hit record highs on the war in Ukraine but also the export ban of palm oil from Indonesia.  With both of these issues now seemingly in the rearview mirror, oilseeds have been taking their lead from crude oil.  As a macro economic indicator, crude has also been under the pump on faltering economic conditions in Europe, the US and now concerns that the Chinese economy is teetering.

The ag commodity market appears to be pricing in  a ceasefire in Ukraine on whispers of peace talks.  Zelensky has said no ceasefire until there is full Russian withdrawal from all occupied territories. It remains a very difficult situation to price, especially when you consider that a third of the world’s exportable surplus is still sitting in an active war zone.

The week ahead….

Longer term, corn production in the US and South America, a three peat La Niña and the ability of the Ukrainian farmer to sow their winter wheat crop will have a say in wheat price direction.

Have any questions or comments?

We love to hear from you!
Print This Post

Click on graph to expand

Click on graph to expand

Data sources: Reuters, Oilworld, SovEcon

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.