Wheat Market Outlook

The Sask Wheat global market outlook for July 17, 2023.

The Sask Wheat market outlook for July 10, 2023.

It will be a short week with U.S. traders on Holiday. In Mercantile’s view, futures still need some adjustment to line up with cash prices and North American seeded area. In Mercantile’s view, North American prices will not improve much until the New Year unless there is a major weather event.

It’s going to be all about weather, and how the market interprets events in Russia, according to Mercantile. In Mercantile’s view, such abnormal events will cause the futures markets to initially start a little stronger, then fade as the conflict will have no real impact on the overall wheat complex. Global wheat buyers remain uncovered. They are buying hand to mouth and using local crops where po...

Mercantile says demand remains slow as there is little (if any) new business. Black Sea prices remain at a considerable discount to North American future prices. Mercantile says, it is worth noting that funds were big buyers of new crop. The floor price for Russian wheat has dropped and as harvest approaches and storage is tight, we expect their low prices to continue for a few weeks.

According to Mercantile, it was the volume and price of Russian wheat offers to Saudi Arabia and to Egypt at $100 below Hard Red Wheat which took the market lower. The USDA WASDE report added to the weakness with a 10 million tonnes increase in world wheat production and 6 million tonnes increase in world stocks says Mercantile. With the weather forecasts looking benign, Mercantile expects markets...

Mercantile says current weather conditions are benign, and their reports suggest an average to above average global crop is possible. On the demand side, Mercantile believes there are poor local exchange rates and belt tightening keeps demand low. Currently Russian wheat is the cheapest milling wheat and best priced feed grain for many buyers, according to Mercantile. In the meantime, Mercantile e...

Mercantile has not heard of significant cash wheat trades this week and they think world buyers are just about covered on old crop and are waiting before buying new crop at hopefully stronger local currencies. The change in the Russian export tax keeps the Europeans a little more bearish, and Mercantile believes U.S. grains remain expensive compared to other origins. Mercantile expects funds to ad...

Mercantile says there currently are few supportive news in the wheat markets. The wheat complex is facing high ending stocks in the EU and Russia and a potentially large global crop, which has European prices heading lower and dragging global prices lower according to Mercantile. The U.S. has been totally uncompetitive for weeks, so Mercantile doesn’t see any major North American cash shorts getti...

Mercantile does not expect world buyers to panic and buy wheat. Alternatively, they expect futures to trade in a narrow range while Russia chases more cash outlets at discount to U.S. futures. Mercantile does not expect the funds to buy in their wheat short while cash wheat is at such a discount to futures.

Mercantile believes the rally in futures is a good opportunity to finish old crop sales if not already done. For now, Mercantile thinks 2023 crops look big and local currencies are weak, so it is difficult to be sure of demand. Russia is very hard to predict, according to Mercantile, but they think Russia will be the cheapest cash wheat suppliers through the September-December period. Weather cont...

Mercantile believes the trade market will be watching for the impact of the rain in the Southern Plains. Questions about plantings and moisture in Argentina and Australia are offset by large wheat stocks in the EU and Russia that will carry into new crop and cushion potential weather problems though the year, says Mercantile. The Ukrainian export potential for the summer forward depends on the res...

Mercantile believes Russian new crop supplies should be ample, and prices are still attractive to Russian growers and assumes Russia will again be an aggressive seller of wheat for the Sept. - Dec. period. According to Mercantile, the future of Ukraine’s wheat crop and their ability to move it remains difficult to assess. Rain in the U.S. will probably not change crop prospects there materially, a...

While futures week over week were higher, Mercantile believes the cash trade was very slow and prices about unchanged. Mercantile says there are concerns about the Black Sea corridor closing, but this has not led to any new buying of wheat. Excess supplies in Russia and the EU will cap rallies nearby, but dryness in the U.S. Plains, Argentina and North Africa, spring wheat seeding concerns in the...

According to Mercantile, the funds and consumers are keeping their ownership of old crop to a minimum as they expect new crop will be available at lower prices. Weather continues to be a big factor of uncertainty and needs to be watched. From Mercantile’s perspective, new crop is undervalued considering how long it is before new crop grain is safely in the bin. Canadian wheat exports in week 35 we...

Mercantile believes the market will center more on weather and what happens to the Black Sea corridor after the 60-day extension. It will be a short week in because of Good Friday. However, weather, Trump’s surrender in New York, and more on the banking crisis could keep markets volatile. Mercantile believes futures could gain a bit. – Mercantile is sold out of old crop and will wait before sellin...

The USDA planting intensions report is out on Friday. In Mercantile’s view, new crop values suggest more corn/spring wheat and fewer soybean acres. However, it remains to be seen what the USDA gives the market. Russian and its Black Sea politics will continue to play a major role as the Northern Hemisphere winter growing and spring planting seasons get underway. If China continues buying USA corn,...

Mercantile suggests Russian wheat continues to dominate the wheat trade. Russian farmers had a big crop, and they are strong sellers at current prices. With a new wheat crop coming shortly in Europe, Mercantile presently doesn’t see any independent strength in wheat. The wheat market will follow corn, which, in the short-term, will be following the pace of US export sales.

Stats Canada is showing that Canada exported 808.1k mt of durum during January 2023. This is a record monthly amount and especially strong for January when Canadian durum exports are usually at their seasonal low. Wheat was lower following the USDA report. The Russian delegation will meet with the UN to discuss their side of the Grain Corridor export deal on March 13th. Mercantile assumes the corr...

According to Mercantile, there seems to be plenty of wheat available to meet buyer’s needs. The Russian prices have fallen to a year low and yet there appears to be more for sale from Black Sea origins. All tenders that were called for were met successfully without the need for North American supplies. Mercantile expects the next WASDE report to increase the USA carryover.

According to Mercantile, there is little in the mix to support a rally in old crop wheat prices. The funds sold many of their long positions, and there is little to suggest them buying in. Mercantile said, there could be a rally in spring wheat as the chart looks oversold. If it does, any remaining old crop should be sold. The strong dollar is making purchases of North American grain difficult in...

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