CBOT Dec 15 futures finished the week at 518.25 USc/bu. A 21.05 USc/bu rise week on week.
This week we got the USDA 1st September grain stocks report, which was viewed as slightly bullish for grain prices, with the numbers coming in below expectations. US wheat production was lowered by 2.31Mt to 55.8Mt. The trade had been expecting a figure closer to 57.9Mt.
Offshore wheat futures pushed higher this week as dry weather through the Black Sea region continues to make headlines. With more dry weather forecasted, already we are seeing disruption to winter wheat sowings. Rains is needed to help winter-sown wheat germinate before going dormant over the winter months. Ukraine and Russia, have seen less than half the normal amount of rain since early August.
The dry conditions in Australia is also making headlines globally at the moment with a lack of spring rain raising concerns over yield and quality prospects in the final stage of production. Thus analysts are calling for a downgrade on the AU wheat crop, with as much as 3Mt being lost to dry conditions. NAB is suggesting 2.4Mt could come off, the 25.3Mt ABARES forecast.
The Russian government has proposed to cut its wheat export tax from 1st October 2015 and exempt durum wheat from the tax. The proposals include increasing the deduction from 5,500 to 6,500 rubles. With total grain exports from 1 July – 18 Sept down 23% yearon-year, the reduction on taxation is expected to encourage wheat exports, which are behind last year’s pace.
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