The USDA’s September report landed late last week and, as is often the case, raised more questions than answers. This release is closely watched, given it incorporates on-the-ground field observations to “ground truth” satellite and model data. Corn and soybean yields were revised lower, which the market had largely anticipated. The real surprise came in corn acre-age, with the USDA adding an additional 3.5 million acres—a 3.7% increase from June. The revision points to a record U.S. corn crop and larger carryover inventories—yet corn futures closed higher.
For wheat, global production was lifted by 9mmt. Australia saw the largest adjustment, rising from 31mmt to 34mmt, while Russia added 1.5mmt to 86mmt, and Ukraine and Canada were both increased by 1mmt. Total world production is now estimated at 816mmt, with all of these gains coming from major exporters. Even with a slight increase in consumption, exporter stocks-to-use remains near 16%, broadly in line with the past three seasons. Despite this bearish set of numbers, wheat futures also finished higher.
The most plausible driver for prices to rally is U.S. export demand. Shipments are running 21% ahead of last year, tightening domestic balance sheets and supporting ideas that the pace could continue.
Beyond the numbers, farm-gate pressure is being felt across the globe. U.S. soybean growers remain sidelined by Trump-era trade policies, with China yet to book a single cargo and stockpiles of recently harvested beans starting to grow. In France, soft wheat prices sit below the cost of production. In Russia, a recent report suggests around 35,000 farmers have exited the industry in the past three years under the weight of export taxes, higher input costs and economic sanctions.
Overall, it appears the futures market has already absorbed much of the bearish supply news. Chicago wheat is holding above key support at 520c/bu, equating to roughly AU$290/t. Importers seem comfortable to wait for further weakness before stepping in, but any sign of a price floor could see buying interest return. If this support level fails, the market will likely probe lower to establish the next layer of demand.
Next week:
Strong U.S. export demand, signs of farmer stress across key regions, and technical support around 520c/bu are helping to steady sentiment. For now, wheat appears to be searching for a bottom, with importer demand likely to return once confidence builds that the worst of the downside has passed
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released it’s June Crop Report last week, and it looks like the energy crisis
International wheat markets continue to bounce around, looking for a level as the northern hemisphere harvest approaches. Locally price spreads have ballooned, but then it
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When bad news lifts the market
For wheat, global production was lifted by 9mmt. Australia saw the largest adjustment, rising from 31mmt to 34mmt, while Russia added 1.5mmt to 86mmt, and Ukraine and Canada were both increased by 1mmt. Total world production is now estimated at 816mmt, with all of these gains coming from major exporters. Even with a slight increase in consumption, exporter stocks-to-use remains near 16%, broadly in line with the past three seasons. Despite this bearish set of numbers, wheat futures also finished higher.
The most plausible driver for prices to rally is U.S. export demand. Shipments are running 21% ahead of last year, tightening domestic balance sheets and supporting ideas that the pace could continue.
Beyond the numbers, farm-gate pressure is being felt across the globe. U.S. soybean growers remain sidelined by Trump-era trade policies, with China yet to book a single cargo and stockpiles of recently harvested beans starting to grow. In France, soft wheat prices sit below the cost of production. In Russia, a recent report suggests around 35,000 farmers have exited the industry in the past three years under the weight of export taxes, higher input costs and economic sanctions.
Overall, it appears the futures market has already absorbed much of the bearish supply news. Chicago wheat is holding above key support at 520c/bu, equating to roughly AU$290/t. Importers seem comfortable to wait for further weakness before stepping in, but any sign of a price floor could see buying interest return. If this support level fails, the market will likely probe lower to establish the next layer of demand.
Next week:
Strong U.S. export demand, signs of farmer stress across key regions, and technical support around 520c/bu are helping to steady sentiment. For now, wheat appears to be searching for a bottom, with importer demand likely to return once confidence builds that the worst of the downside has passed
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Data sources: Reuters, Sask Wheat, USDA, Next Level Grain Marketing, Mecardo
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
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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.
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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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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.