Wheat – Weekly Strategy Market Update, 20 August 2018
USDA report was well under market expectations, with traders reading it with disbelief asking how they could get it so wrong. Markets tumbled on the back of the USDA report due to the reduction being smaller than market expectations. USDA cut world wheat production by 6.7 mmt to 729.6 mmt. Marketers were expecting greater cuts in production out of the EU, Black Sea and Australia. Additionally, in Ukraine, a soft export cap has been agreed upon this season of 16 million tonnes.
Domestically new crop values have remained stable even after the USDA announcement due to parts of the East Coast being in a drought or parts such as VIC and SA struggling. Local basis continues to strengthen against global markets. In the past week we have seen 336kt of Wheat added to the WA shipping stem and a total transhipment volume currently of 340kt
New season we expect strong values coming into harvest for 18/19. Looking at old season values they have seen further strength off the back of new season, so if you are holding old season grain ensure you speak with your broker.