Wheat Market Outlook

According to Mercantile, the bulls needed production downgrades in Europe to offset stronger production in the U.S. Mercantile says they didn’t get it from the USDA, so they are back to speculating over harvest results. Mercantile says another concern is thin export demand for new crop wheat as importers continue to buy hand-to-mouth. The wheat market will continue to experience harvest pressure....

According to Mercantile, activity in Russia indicates that the shortfall in production was not huge and Russian traders are eager to make up for the business they missed because of the floor price. Additionally, they need to find markets outside of Iraq, Pakistan, and Turkey which usually provide strong early demand. Meanwhile, smaller crops in France mean that farmers are reluctant to sell. Harve...

Mercantile predicts that markets will remain difficult to forecast. Farmers are under sold and consumers are under-bought. There was a nice flush of tender business last week and exporters will be hopeful of more to come. It is not evident where the next wave of buying will come from. What’s is for sure is again there will be prices driven by Europe in the early part with better North American lev...

Mercantile expects the markets to remain weak due to dumping of remaining old crop product and new crop harvest pressure from Europe. This will put pressure on futures, but Mercantile does not expect to lower prices for forward cash. Presently, Mercantile does not expect too many cash buyers to come to the market, but they note that new crop coverage is low. Soft wheat will stay bearish. However,...

Mercantile says that there was nothing in the WASDE report to stir the markets. Wheat traders are looking at the sluggish demand, and the abundance of old crop wheat that needs a home before harvest starts. Looking further out, there are several weather concerns and wheat supply will be tighter this year once all work through the glut of grain that is currently on the market.

According to Mercantile, the recent tenders demonstrated both the lack of cover of the major importers, but also the abundance of available old crop wheat. Weather is still a major issue in some regions (Russia and France) while politics are causing additional complications, says Mercantile. The USDA report is out on Wednesday.

According to Mercantile, wheat prices seasonally decline in June as harvest begins in the Northern Hemisphere. However, weather concerns, especially in Russia where the drought is expected to deepen, will challenge the seasonal weakens of the wheat market.

It is a short week, so Mercantile doesn’t see much change in the markets. The futures will be lightly traded and a little weaker by the and of the week, but thin according to Mercantile. Growers will sell some old crop and leave the new crop alone while weather is so variable. The funds will remain undecided. Mercantile would continue to hold new crop sales for the time being. Mercantile does not...

All markets opened the week stronger, according to Mercantile. Minneapolis spring wheat futures were up 21.75 to 28.25 cents across the board. Weather is likely playing a factor, as the next seven days remain dry for the Southern Plains. Mercantile says Russian and EU FOB prices have also recently climbed to a more competitive price with the U.S. on the Black Sea crop concerns. EU (Matif) futures...

According to Mercantile, many of the origins saw their stocks lowered, so Mercantile says these are bullish statistics. Ukrainian domestic supplies are the lowest since 2013, as production declines and stocks normalize. According to Mercantile, Funds are nervous and are reversing positions and consumers are largely uncovered and are getting anxious. On the other hand, Mercantile says Russia seems...

Mercantile says wheat has benefitted fund-led short covering, but now will watch corn, where funds are still near record short and long-term moving averages have been broken. According to Mercantile, wheat has become expensive vs. corn, so any further strength in corn could provide the next wave of support to wheat prices. Funds are now long MATIF, which is a partly a reflection of the smaller W E...

While weather continues to be difficult to read and plantings are delayed, Mercantile does not see any major reasons for markets to fall, although wheat could be overdone. Nevertheless, 97.9 per cent of Kansas is experiencing some sort of abnormal dryness, according to Mercantile, and there are concerns in most of Europe. In this climate, Mercantile does not see growers selling.  So far, Funds are...

Mercantile says geopolitical tensions are causing additional uncertainty in the commodity markets. There is currently a standoff between the fund short and farmer holding. - Mercantile would use this rally to finish old crop wheat sales but would not sell any new crop for now.

Mercantile says the international climate remains fractious, particularly in the Middle East. Mercantile is slowly seeing energy prices increasing and inflation starting to rise. In their view, world buyers are largely finished with old crop purchases. Futures will be moved by whatever Funds or farmers need to do. Mercantile sees the old crop going lower as carrying charges increase, while there w...

Mercantile will have a new WASDE report on Thursday. Mercantile expects the USDA to lower wheat exports because of the Chinese cancellations a few weeks ago. According to Mercantile, the USDA will leave wheat production estimates alone and still expects slightly stronger wheat futures while the politics in the Black Sea area remains unclear. There were rumours of more Chinese cancelation of some w...

Mercantile believes Russian and Black Sea politics will likely dominate conversation in the coming week. If the dispute between RIF and Moscow continues, Mercantile says it could be bullish the current crop wheat. The USDA seeded area and quarterly stocks reports are out on Thursday. The trade is expecting larger wheat stocks (one billion bushels) and smaller seeded area (47.3 million acres). All...

According to Mercantile, Chinese wheat cancellations/deferrals will weigh on the market in an environment where old crop demand is limited. The EU and Black Sea still have old crop wheat in need of a home before June. Mercantile would recommend looking at finishing old crop sales but would not sell new crop for now.

Mercantile expects some weakness in wheat futures following the decline in cash values. Mercantile says there will be more pressure on the old crop as weather concerns and low returns makes new crop sellers reluctant. Chinese cancellations of wheat changed the United State’s tone, according to Mercantile. Cash wheat markets remain weak as the EU and Black Sea search for old crop demand. Mercantile...

Mercantile says there are few buyers left for the current crop wheat so prices could be headed even lower whilst they still have current crop sellers who need to sell. However, Mercantile does expect some Fund buying so they would leave cash markets alone for the time being.

According to Mercantile, Russia still has wheat to sell and this is lowering world price as the EU needs to reduce stocks. Wheat needs to fight for feed demand as well as milling demand. Meanwhile, Funds have a record short at a time when prices have fallen below the cost of production for growers in some areas. Either costs will need to go down, or markets higher.

The opportunity for an old crop wheat rally is dwindling, according to Mercantile. Every major wheat exporter still has wheat to ship, and exporters will be competing for shipping windows in the next three months before the new crop harvest starts. Mercantile says more questions remain as to if there is demand for all the available wheat. Currency devaluations in many importing nations means that...

The EU, Russia and Ukraine need to see record export demand for Feb. through June to meet USDA projections, and there seems to be little evidence at the moment that demand will come close to those numbers. At the same time, traders are concerned about the developments in the Middle East and about geopolitical disputes in general. This environment will keep markets steady, but as the cheapest food...

As prices fall, there is a declining likelihood of further decreases, but at the same time, there are indications of more distressed sellers trying to generate cash to pay for spring inputs given expensive storage and finance costs. Heat and dryness are noted in India, but given last season’s experience, the market will be reluctant to react too aggressively. Poor crop prospects in North Africa su...

Mercantile’s outlook this week: Mercantile believes it is tough predicting markets with so many trouble spots in play. Their inclination is that growing conflicts will prove to be a little negative for most commodities as demand will be lower. Mercantile could see wheat a tad higher, as Russia looks more reluctant to be aggressive sellers forward. Mercantile doesn’t see traders making any major mo...