The wheat market is caught in a tug of war between two opposing forces. On one hand, the building supply numbers as good in-crop rains boost crop potential. On the other hand, there is a potential increase in demand as a key importers feels the pinch.
Last week, we showed a map of Chinese key wheat growing areas demonstrating a recent deficit in rainfall. To put this into greater context, the two most impacted areas being the provinces of Henan and Anhui, account for 40% of total wheat production. Both of these areas are running at or below the long-term soil moisture ranges.
Crop stage is at flowering to early grain fill. This week, maximum temperatures push into the mid-30s, which will add stress to the crop at a critical time. It is too early to definitively call the Chinese crop ‘smaller’, but the region bears watching as a potential flag and hinders the aim of the Chinese State to achieve food and feed independence.
Conversely, the US and the Black Sea region, both key production areas for realising price outlook, keep getting good rains as the crop powers towards yield setting. The past two weeks have seen rainfall totals range between 35 to 200mm over much of the HRW wheat areas. The states of Oklahoma, Texas, and Kansas will probably welcome a week of sunshine. Crop condition scores continue to improve.
Southern Russia has also seen very welcome 25-50mm rains. Ukraine remains dry in the past week but appears to be in line for some moisture this week.
Market sentiment, uncertain economic times and an unpredictable political environment has seen many commodities, including wheat, lose value over the past couple of months. Prices for wheat in Chicago (CBOT) and Europe (Euronext) are at a point that does not justify the risk of forward sales for farmers in any part of the world. French (MATIF) wheat at €199.50 is thought to now be below the average cost of production.
Fundamentally, wheat looks to have an uphill battle as it digests increasing production, a bigger carryover from the previous season, and uncertain demand. Coupled with a heavy sold position in wheat (CBOT) signifying a bearish view on the market by speculators, prices are on shaky ground. Do they go below long-term resistance, or do we bounce from here?
The week ahead….
Market sentiment can be a funny thing. Should we see improving global trading conditions and some macroeconomic confidence, market participants’ views could swing from being outright bearish to more optimism. We can only hope.
2026 has opened with a familiar driver dominating the headlines: geopolitics. Forget Russia, Venezuela or Greenland, developments in Iran arguably carry far greater implications for
With little fresh direction, wheat prices have continued to follow the path of least resistance, grinding lower. After almost four years of entrenched conflict in
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Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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Wheat walking a fine line
Last week, we showed a map of Chinese key wheat growing areas demonstrating a recent deficit in rainfall. To put this into greater context, the two most impacted areas being the provinces of Henan and Anhui, account for 40% of total wheat production. Both of these areas are running at or below the long-term soil moisture ranges.
Crop stage is at flowering to early grain fill. This week, maximum temperatures push into the mid-30s, which will add stress to the crop at a critical time. It is too early to definitively call the Chinese crop ‘smaller’, but the region bears watching as a potential flag and hinders the aim of the Chinese State to achieve food and feed independence.
Conversely, the US and the Black Sea region, both key production areas for realising price outlook, keep getting good rains as the crop powers towards yield setting. The past two weeks have seen rainfall totals range between 35 to 200mm over much of the HRW wheat areas. The states of Oklahoma, Texas, and Kansas will probably welcome a week of sunshine. Crop condition scores continue to improve.
Southern Russia has also seen very welcome 25-50mm rains. Ukraine remains dry in the past week but appears to be in line for some moisture this week.
Market sentiment, uncertain economic times and an unpredictable political environment has seen many commodities, including wheat, lose value over the past couple of months. Prices for wheat in Chicago (CBOT) and Europe (Euronext) are at a point that does not justify the risk of forward sales for farmers in any part of the world. French (MATIF) wheat at €199.50 is thought to now be below the average cost of production.
Fundamentally, wheat looks to have an uphill battle as it digests increasing production, a bigger carryover from the previous season, and uncertain demand. Coupled with a heavy sold position in wheat (CBOT) signifying a bearish view on the market by speculators, prices are on shaky ground. Do they go below long-term resistance, or do we bounce from here?
The week ahead….
Market sentiment can be a funny thing. Should we see improving global trading conditions and some macroeconomic confidence, market participants’ views could swing from being outright bearish to more optimism. We can only hope.
Have any questions or comments?
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Data sources: Mecardo, USDA, Reuters, Latisfundist, Next Level Grain Marketing
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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.
MEET THE TEAM
Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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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.