The global wheat market continued to free fall this week, as wheat struggles to find a price that will stimulate demand. Falling a further 25US¢/bu from last week. September Futures finished the month below the US$5/bu mark at US¢496.50/bu. As strong fund selling and large global production prospects for this season pushed values lower.
US Crop Progress and Condition, 85% of the US winter wheat crop has now been harvested, ahead of the 80% five year average, with reports of yields being better than expected. Spring wheat harvest is just getting started with 2% harvested. Spring wheat condition is up one point to 71% good to excellent.
Canada has received some rain last week, but as they are fast approaching harvest, some feel that it might be a little too late. Canadian wheat production forecasts for 2015/16 were reduced by the International Grains Council (IGC). Canadian wheat output is now forecast at 28Mt, down 2Mt from June. This reduction to the Canadian production is supportive for the competitiveness of Australian grain into global markets. Especially as Canada produces high protein wheat that directly competes with Australia.
At a global level, wheat production in 2015/16 is forecast 1Mt lower at 710.3Mt, compared with June. Global wheat stocks in 2015/16 have been revised 5Mt higher in light of lower forecast consumption, adding to an already bearish outlook for this season.
India is reintroducing a 10% import duty on wheat for the first time in 8 years. This comes after sales of 500,000t of Australian milling wheat to India. Indian wheat stocks have built sharply, and the government is keen to curb imports to help support local prices.
Russian wheat prices have been falling as their harvest gathers pace, and after some early rain delays. Grain exports from Russia during the first half of July were almost 60% lower than last year. However, despite the sluggish start, Russian wheat remains the origin of choice for the recent Egyptian tenders. Fob prices for 12.5% protein wheat fell US$6/t over the last week.
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