Wheat markets have been relatively quiet this week. The unrest in the Black Sea barely rates a mention anymore, the Middle East seems to be sorting itself out, the Northern Hemisphere crop is all but in the bin, so now we wait for Australian and Argentinian crops to come in.
The Australian crop has a few lingering questions over it after some unseasonal rains disrupted harvest. Low protein and high screening issues were noted in the West and now rain in the past week. Now the entire East Coast
looks to get a drenching over the next couple of days is raising some concerns
about weather damage. The last half of harvest looks to be dragged out by the
unwelcome return of falling numbers of machines back in the sampling sheds.
Perhaps the biggest market mover in the past week has been the messages
coming from the President Elect’s office. It is a good reminder that politics and open markets are not
necessarily good bedfellows. The thinly veiled threat to impose a 25% import tariff on both Canada and Mexico took the market by surprise.
Firstly canola, right on the back of getting belted by falling palm oil
prices, got hit for six on news that President Trump was considering imposing a
tariff on Canadian imports. Canada exports durum, potash and beef (among other things) to the US, but it is their canola market that felt
the immediate impact. Canada directly exports 90% of its canola oil and 70% of
its canola meal to its southern neighbour. The potential of Canada’s crush program slowing down would mean more
seed would hit alternative export channels. This has had the effect of slashing
prices on both sides of the Atlantic. Winnipeg ICE is down 8% for the week and
European MATIF is down 7%.
Mexico is also in the firing line. Having Long been the target of Trump’s ire, the President-elect has promised to impose a 25% tariff there until the border is secured.
Mexico is the largest importer of US wheat (2023 valued at US$1.08B) and not an
insignificant supplier of beef and cattle. In 2023, the trade in beef and offal
products totalled nearly US$2B.
With just under two months to go before the Presidential inauguration,
some analysts have considered the tariff message to be a ‘warning shot’. In other words, giving the countries in question an opportunity to
bring more than just the status quo to the negotiating table.
Elsewhere, the French farmer is getting a wriggle on and has caught up
to the average winter wheat sown area for this time of year after a delayed
start. Russia has had good rain over their winter wheat areas and should
alleviate any concerns in the short term. Questions around a Russian export
quota all point to limits being placed on volumes being exported early in the
New Year.
Next week
Politics will continue to influence price direction in the short to midterm as the market grap-ples with the new world order.
The fact that the wheat market has been relatively unchanged week on week doesn’t imply the market has been without volatility. After a slightly bearish
Another tumultuous week in wheat – and indeed commodities and stocks as a whole. President Trump rolled out 25% broad-based tariffs on Canada and Mexico
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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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Words can hurt
The Australian crop has a few lingering questions over it after some unseasonal rains disrupted harvest. Low protein and high screening issues were noted in the West and now rain in the past week. Now the entire East Coast looks to get a drenching over the next couple of days is raising some concerns about weather damage. The last half of harvest looks to be dragged out by the unwelcome return of falling numbers of machines back in the sampling sheds.
Perhaps the biggest market mover in the past week has been the messages coming from the President Elect’s office. It is a good reminder that politics and open markets are not necessarily good bedfellows. The thinly veiled threat to impose a 25% import tariff on both Canada and Mexico took the market by surprise.
Firstly canola, right on the back of getting belted by falling palm oil prices, got hit for six on news that President Trump was considering imposing a tariff on Canadian imports. Canada exports durum, potash and beef (among other things) to the US, but it is their canola market that felt the immediate impact. Canada directly exports 90% of its canola oil and 70% of its canola meal to its southern neighbour. The potential of Canada’s crush program slowing down would mean more seed would hit alternative export channels. This has had the effect of slashing prices on both sides of the Atlantic. Winnipeg ICE is down 8% for the week and European MATIF is down 7%.
Mexico is also in the firing line. Having Long been the target of Trump’s ire, the President-elect has promised to impose a 25% tariff there until the border is secured. Mexico is the largest importer of US wheat (2023 valued at US$1.08B) and not an insignificant supplier of beef and cattle. In 2023, the trade in beef and offal products totalled nearly US$2B.
With just under two months to go before the Presidential inauguration, some analysts have considered the tariff message to be a ‘warning shot’. In other words, giving the countries in question an opportunity to bring more than just the status quo to the negotiating table.
Elsewhere, the French farmer is getting a wriggle on and has caught up to the average winter wheat sown area for this time of year after a delayed start. Russia has had good rain over their winter wheat areas and should alleviate any concerns in the short term. Questions around a Russian export quota all point to limits being placed on volumes being exported early in the New Year.
Next week
Politics will continue to influence price direction in the short to midterm as the market grap-ples with the new world order.
Have any questions or comments?
Click on graph to expand
Data sources: SovEcon, USDA, Bloomberg, Next Level Grain Marketing, Mecardo
Categories
Have any questions or comments?
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The hits keep coming
The fact that the wheat market has been relatively unchanged week on week doesn’t imply the market has been without volatility. After a slightly bearish
Who is getting sick of tariff talk?
President Trump has been at it again, talking about imposing tariffs on all agricultural imports, (albeit via the X platform). This leads to all sorts
The art of the deal
Another tumultuous week in wheat – and indeed commodities and stocks as a whole. President Trump rolled out 25% broad-based tariffs on Canada and Mexico
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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.