Wheat has risen off the canvas, taken a standing eight and launched into a counter-punch. Having touched 540c/bu a couple of weeks ago, the CBOT Dec ’23 contract has pushed back above 590c/bu. It is a sight for sore eyes for those of us who have been shaking our heads at how far the price of wheat has fallen.
Ever the opportunist, China has stepped in
recently with some large commodity purchases.
After a very slow start, Chinese purchases of US grains are getting
close to average. Year on year, China is
only 5% behind on total wheat imports (680kmt for the month of Oct), 31% behind
of soybean imports (thanks to Brazil) but an impressive 22% increase in corn
imports.
It is likely the corn business is behind this
rally, which is odd in itself given the US is forecasting a carryout in excess
of 2B bushels (~50Mmt).
There is no doubt that markets are
experiencing some kind of ‘risk on’ moment.
There is so much political turmoil going on, that it feels like major
importers are going to need to step up purchases if they want to buy it while it’s
cheap. Russia remains the cheapest and
most plentiful origin which is pouring cold water on any attempts the market is
making to really heat up.
Speaking of cold water, Argentina looks to
receive some very timely rains this week. Having adjusted the crop condition
ratings to 50% fair to poor, these rains should arrive in time to assist grain
fill. Damage has been done due to prolonged drought, but as we know, wheat is a
tough plant that can hang on and add yield late in the season. The USDA has Argentine production at 16.5mmt,
down 10% on the 5-year average of 18mmt, but 4mmt above last year’s crop.
There are a lot of balls in the air at the
moment. The flash point in the Middle
East appears to be at risk of spilling over into a full-blown conflict. Chinese
demand is adding an element of haste. Drought in Brazil is raising questions
over next year’s crop and causing navigation issues along river corridors.
Economics. Crude oil. Russian exports.
Good luck trying to fit all the pieces of this puzzle together.
Next week
The Aussie shipping
stem looks to be getting busy with old and new crop wheat and barley heading
for China. Harvest is ramping up in SA and WA with the grower happy to
sell. Black Sea wheat is reported to be
displacing Aussie from some of our SE Asian customers so the Chinese demand
will be crucial going forward.
Faba beans have become a popular break crop in southern states, delivering not only a valuable export or feed commodity, but also giving nutritional benefits
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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 punches on
Ever the opportunist, China has stepped in recently with some large commodity purchases. After a very slow start, Chinese purchases of US grains are getting close to average. Year on year, China is only 5% behind on total wheat imports (680kmt for the month of Oct), 31% behind of soybean imports (thanks to Brazil) but an impressive 22% increase in corn imports.
It is likely the corn business is behind this rally, which is odd in itself given the US is forecasting a carryout in excess of 2B bushels (~50Mmt).
There is no doubt that markets are experiencing some kind of ‘risk on’ moment. There is so much political turmoil going on, that it feels like major importers are going to need to step up purchases if they want to buy it while it’s cheap. Russia remains the cheapest and most plentiful origin which is pouring cold water on any attempts the market is making to really heat up.
Speaking of cold water, Argentina looks to receive some very timely rains this week. Having adjusted the crop condition ratings to 50% fair to poor, these rains should arrive in time to assist grain fill. Damage has been done due to prolonged drought, but as we know, wheat is a tough plant that can hang on and add yield late in the season. The USDA has Argentine production at 16.5mmt, down 10% on the 5-year average of 18mmt, but 4mmt above last year’s crop.
There are a lot of balls in the air at the moment. The flash point in the Middle East appears to be at risk of spilling over into a full-blown conflict. Chinese demand is adding an element of haste. Drought in Brazil is raising questions over next year’s crop and causing navigation issues along river corridors. Economics. Crude oil. Russian exports. Good luck trying to fit all the pieces of this puzzle together.
Next week
The Aussie shipping
stem looks to be getting busy with old and new crop wheat and barley heading for China. Harvest is ramping up in SA and WA with the grower happy to sell. Black Sea wheat is reported to be displacing Aussie from some of our SE Asian customers so the Chinese demand will be crucial going forward.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Data sources: Reuters, USDA, Next Level Grain Marketing
Categories
Have any questions or comments?
Geopolitics and shorts weather
Amazing the difference a week can make. It all started last Friday morning, with continued escalations in the Middle East. The wheat market jumped 20
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
Argentina dealt a cruel hand
It has been a relatively benign week in the wheat market. Some of the risk premium that had built up over Middle East concerns has
Performance from pulses
Faba beans have become a popular break crop in southern states, delivering not only a valuable export or feed commodity, but also giving nutritional benefits
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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.
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.