One of the first market reports I opened this morning was titled “What’s going to stop the slide”. Reads a little ominous doesn’t it. It’s from the USA, and is talking about futures so it may have a little drama draped over it. If the world as we’ve been taught exists, then the simple answer is demand. Demand will stop the decline. If what we are lead to believe from the major merchants is true, that wheat is simply a generic commodity, 11.5% milling wheat from the US is no different to 11.5% milling wheat from Russia, or Ukraine or Argentina. Then demand should simply go to where grain is cheapest.
If this is the case than the recent decline in cash values in the USA should start to result in an uptick in US sales. Currently we see HRWW wheat out of the US Pacific Northwest valued at roughly US$286 +/- C&F Asia. Russian wheat had been heaps cheaper, today Russian wheat is equivalent to something close to US$285 C&F Asian consumer. So, “What is going to stop the slide”, well unless Russian wheat gets cheaper, one would expect a slight dip in US wheat values should see support start to creep in. Will it stop the slide, ask a fund manager.
That statement holds the question that will dictate the price of wheat for the mid to long term, “unless Russian wheat get cheaper”. Currently we see Russian winter wheat having a dream run, and their spring wheat getting sown into all but ideal conditions. The current production estimate for Russian wheat is over 90mt. The last time Russia produced over 90mt was their record year in 2024.
I’m not saying that wheat here will be worth the same as it was in Dec 2024, APW1 @ AUD$297/ t delivered G’corp Spring Ridge, when the AUD was worth 64c, but it does tend to question the chance of a rally in international values, and greatly reduces the chance of getting the world wheat stocks to use ratio back to a tighter number.
International feed barley prices continued to push AUD$1.00 to AUD$5.00 lower overnight. French and Ukraine values leading the decline. Aussie values were a tad weaker, more a function of currency. At US$260 to US$270 C&F China, the only people winning this is the Chinese consumer.