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Weekly Report 26/4/16

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Wheat futures rallied last week, as funds extended technical short-covering and reports of firmer export demand helped futures to climb.

CBOT March 16 futures finished the week at 457 US¢/bu down 16.2 US¢/bu from the previous week.

After a period of dryness which provided support to US wheat futures, rains over the weekend and with more on the near horizon, has put pressure on prices.

The USDA released the first weekly crop progress report for 2016 – the report was bearish for wheat with 59% of US winter wheat crops were rated as in a good or excellent condition, well above last year’s 44% rating. The rating is the highest for this stage in the season since 2010, when 65% of crops were classed as being in a good/excellent condition. US spring wheat is now at 13% planted.

Early forecasts for the 2016 Russian and Ukrainian wheat crops have been released restating concerns for Black Sea production next season. However, these concerns alone do not appear to be large enough to be to have any real effect on pricing.

The Ukrainian state weather centre has reduced the crop forecast by 35% from 2015/16 at 17 million mt. This forecast is based on losing approx. 1 million ha of the winter wheat planted area due to insufficient snow cover over. UkrAgroConsult however are forecasting slightly higher production at 18.5 million mt due to favourable spring weather, this is still far below this season’s crop of 26.5 million mt

Russia has forecast their crop at 57 million mt from 62 million mt this season, a cold weather forecast is expected for April/May, and as a result some growers are expected to reduce the spring wheat area they sow.

US wheat was the cheapest in the latest Iraq tender at US$238/mt CNF (Aussie wheat offered at US$249.75/mt CNF and Canadian at higher levels still!).

To read the full report click the below link

Weekly Report 16_04_26

Weekly Report 2/4/16

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Wheat futures ended the month of March up, as dryness continues to build in the US southern states.

CBOT March 16 futures finished the week at 473.2US¢/bu up 10.2 US¢/bu from the previous week.Chart160402 WR1

Eyes continue to remain focused on the US weather. Parts of Texas, Oklahoma and Kansas experienced low temperatures last week, raising concerns about potential damage to winter wheat crops. Conditions have also been drier than ideal, with incidence of drought increasing, 20% of Oklahoma was classed as experiencing some form of drought as at 29 March, up from 14% a week earlier Drier than usual conditions are also persisting in the northern spring wheat areas.

Chart160402 WR2

Last week the USDA released their prospective plantings report – This year’s total wheat area is estimated at 20.1 million ha, below the lowest trade and represents a 46 year low. The decline in the US wheat area has been driven by drops in both winter and spring wheat sowing – with spring plantings of 4.6 million ha, the lowest since 1972. The winter wheat area is expected to be 8% lower year-on-year (14.7 million ha).

French winter crops continue to be reported in good condition. Ratings as at 28 March are broadly comparable to 2015 and unchanged week-on-week for winter wheat at 92% rated good to excellent.

Russia is forecast to produce 61 million mt of wheat which would result in an export task of 23 million tonne and the Ukraine despite a rough start to their crop establishment in some regions is now forecast to produce a record 27.25 million tonne and to export a record 15.5 million tonne.

Chart160402 WR3

To read the full report click the below link.

Weekly Report 16_04_02

Weekly Report 12/2/16

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The grain market was quiet on Friday, with the US market slowing down for the Presidents Day Holiday weekend.

CBOT March 16 futures finished the week lower at 457.2US¢/bu down 15.4 US¢/bu for the week.

Chart 160212 WR1

This week saw the release of a very bearish USDA report on Tuesday evening our time. The USDA added 6.8 million tonnes to global wheat ending stocks to a record 238.9 million tonnes. The increase in stocks mainly came from reduced demand from India and China. Wheat usage in China is estimated to be 4.7 million tonnes lower than January’s report as the governments internal economic food policies favour other grains. Global production was revised higher in Argentina (+0.5 million tonnes) and Ukraine (+0.3 million tonnes). Australian wheat remained unchanged in the report at 26 million tonnes – way too high!

Egypt tendered for wheat on Monday and received no offers to do uncertainty about quality restrictions. Egypt in an attempt to clear that up Egypt’s Supply Ministry and GASC have both confirmed that they will accept shipments with up to 0.05% of ergot, and reissued a tender and purchased one cargo of Romanian wheat at US$190.88/t (Cost and freight). It is reported that Bunge has launched legal proceedings to challenge the decision made by Egypt to reject the French Cargo.

India is predicted to harvest its smallest wheat crop in six years after two successive years of below-average monsoon rainfall. The Indian government estimate that Indian wheat production is at 93.8Mt. This figure is down from 95.9Mt last season (USDA) and below government targets of 94.8Mt. This potentially opens the door for wheat imports from Australia.

Attaché estimate, Canadian wheat plantings will fall to a 5 year low of 9.26 million hectares in 2016. This estimate is below the initial estimate from the International Grains Council which sits at 9.5 million hectares.

Russian Ukraine wheat crop at risk. Recent mild temperatures and rainfall has reduced snow cover across central and southern Russia and eastern Ukraine. With some regions of Ukraine are seeing problems of freezing with almost a third of the crops at risk. A close eye will be kept on what the weather does now as we enter that final period of winter as there are a couple of scenarios that could play out and result in elevated levels of winter kill this year.

Chart 160212 WR2

Chart 160212 WR3

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Weekly Report 16_02_12

Weekly Report 29/1/16

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Grain markets ended the month of January making up some of the losses they started the year off with. Wheat managed to finish up almost 2% up from where it started the year.

CBOT March 16 futures finished the week slightly lower at 472.2Usc/bu down 2.8 USc/bu for the week.Chart WR 160129Potential cuts to the Russian wheat export tax, as well as the possibility of export restrictions were amongst the main topics last week.

In Russia the Ruble has fallen to an historical lows – US$1=84.24 RUB. A fall in the Ruble has caused the local Russian grain price to rise, placing pressure on the pig and poultry margins. As a result changes to the export system are being considered to support domestic end users, a decision will be made on 3rd February.

Speculation of potential changes to Russian grain export policies supported wheat futures early in the week, with wheat futures closing up 9.2USc/bu on Tuesday.Chart WR 1601292Snow cover falls as temperatures rise in Eastern Europe. Warmer temperatures in the last few days has caused protective snow cover to diminish – temperatures are expected to remain above normal going into this week, preventing any threats of damage to wheat areas. Snow is expected to fall in Ukraine and Russia this week which should help protect against winter kill.

Over the weekend, there was confirmation that Egypt had rejected 63Kt of French wheat due to the presence of ergot. The Egyptian agriculture minister has specified a zero tolerance on ergot. Despite a 0.05% allowance in international standards.

Worries over the size of Indian 2016/17 wheat crop has prompted flour millers to call for the 25% duty on wheat imports to be removed from April. Wheat plantings were down 7% year-on-year at the end of December due to a lack of rainfall and the unfavourable conditions have persisted into January. This is the second year of challenging conditions, and could lead to increased import requirements.

In the short term the outlook is downward, with the market holding out for news of the Northern Hemisphere crops coming out of dormancy, however there will be no clarity until mid-March.Chart WR 1601293

To read the full report click the link below.

Weekly Report 16_01_29

Weekly Report 15/1/16

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Agricultural markets had a rough week as the market reacted to the volatility in the Chinese economy. China is a major importer on the global market, so any reduction in the Chinese economy raises concern on future demand.

CBOT March 16 futures finished the week slightly lower at 468.4Usc/bu down 0.8 USc/bu for the week.


The Aussie dollar finished the week at the 70c mark. China’ growth prospects appear sluggish and if their economy continues to slow we can expect our A$ to come under pressure too.

To read the full reports click the link below.

Weekly Report 16_01_18

Weekly Report 8/1/16

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Agricultural markets had a rough week as the market reacted to the volatility in the Chinese economy. China is a major importer on the global market, so any reduction in the Chinese economy raises concern on future demand. CBOT March 16 futures finished the week slightly lower at 468.4Usc/bu down 0.8 USc/bu for the week.

With some of the US hit by storms late last month, concern was rising about the condition of the growing winter crop. The latest USDA crop condition rating suggesting that the unfavourable weather thus far had done little damage to the 2016 crop. With Good to Excellent ratings for selective states all over 50%.

US Wheat continues to struggle to find export demand. With shipments of US wheat at the lowest levels since the marketing year began. For the week ending 31 December the US  exported only 76,500t of wheat well below 200 – 400k analysts’ expected.

Furthermore Argentina’s 2016 wheat production has been forecast up to 10.1Mt by the Buenos Aires Grains Exchange in its latest weekly report, 0.6Mt higher than the previous estimate. The upward revision is due to higher than expected yields. Wheat exports from Argentina are expected to increase!

An increase of supply to an already ample market combined with the slowdown in the Chinese economy and a stronger US dollar points to further pressure on US exports.

Weather conditions across parts of Poland, Ukraine and Russia saw temperatures plummet low enough to cause possible winter kill. Nevertheless also bringing greater snow cover to protect the winter crops ahead of harsher weather in the coming weeks.

To read the full report click the link below.

Weekly Report 16_01_08

Weekly Report 26/12/15

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US Wheat markets pushed lower again prior to the Christmas holiday, as the market struggles with strong export competition and ample global supplies.

CBOT March 16 futures fell 14.6Usc/bu and finished the week at 469.4Usc/bu.

The winter wheat crop in the U.S. went into dormancy in decent enough shape. Some of the key states will update conditions over the winter, but the next benchmark for the market is Jan. 12, when USDA releases grain stocks and seedings reports.

Winter wheat in the Black Sea region appears to be improving after a rough start, though wheat production could still be down in Ukraine and perhaps Russia, but this is not seen as a major concern to buyers, considering the heavy global stocks.

Argentina returns as a competitive player in the world market, after the new government lifted currency and export controls. The recent changes has seen the Argentinian Peso weaken by nearly 27%.

Last week saw Argentina win the Egyptian wheat tender, with price being the clear deciding factor of the trade. Egypt purchased 120,000t of wheat at approx. $175/t, with the best French offer at $187/t and Russia at $193/t. Making Argentina 10% protein wheat the cheapest in the world!!

Russian lobbyists are calling for the Russian wheat export tax to be reduced. Russia is now the only mainstream exporter with export taxes in place. The markets have so far reacted bearishly to this news, as a lower tax could spur on the Russian export pace, in turn adding pressure to global wheat prices. Even if it does not increase export pace, Russian wheat may become more price-competitive with a lower tax.

Weekly Report 15_12_26

Weekly Report 27/11/15

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CBOT Dec 15 futures finished the week at 479.2 USc/bu. Down 11.55 USc/bu week on week.

The overall message continues to remain that there is adequate wheat stock in the world today however production prospects in India and the Ukraine need ongoing monitoring.

Precipitation for a large portion of the US winter wheat area this week, allowing the USDA to increase the good to excellent to 53% up 1% for the week followed by cooler. US winter wheat is 96% planted and 90% has emerged.

Winter crops in Western Europe are generally in good condition heading into winter, but conditions remain poor into Ukraine and Russia, but with showers forecasted over the next ten days could ease concerns that were developing due to lack of rain. French winter wheat conditions are looking even better with 98% of winter soft wheat rated good to excellent compared to 93% last year. The latest EU Commission crop report also confirmed improvements for crops in Eastern Europe after mild weather earlier in November.

The Ukrainian supply situation continues to attract traders’ attention with nearly 36% of winter crops were rated ‘poor’ condition vs 18% last year. Indications their export potential in 2015/16 could be 8.5 million tonnes well below the volume achieved last year. The USDA estimate for Ukrainian production is 24.75 MMT for 2014/15, and some analysts are calling the 2015/16 crop could be as low as 20 million tonnes.

Traditionally Turkey has been a large buyer of Russian wheat, but Russia has stated it will stop supplying Turkey following recent military developments. This could present an opportunity for EU or Ukrainian exports to Turkey. Turkey is forecast to import 3.8Mt of wheat this season (USDA).

To read the full report click on the link below.

Weekly Report 15_11_27

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