US wheat futures closed in the green making good gains across all grades of red wheat. Weekly US export sales were a bit rubbish, 313kt, but the trade wasn’t exactly punting on a big number, guessing 250k-600kt prior to the release.
There’s a USDA World Ag Supply and Demand report due out tonight. The market may have found some support from a Bloomberg article suggesting a reduction in US production on top of last months already low numbers. If this is the case, then yes, it’ll help sustain this rally and add some strength to the US market in the mid to long term.
The numbers that will mean the most to the rest of the world will be the numbers for Russia and the EU. In recent weeks Russian FOB values have weakened. This tends to tell us that there is plenty of wheat coming on to, or expected to come on to the market in the short to mid term, and that the sellers are “happy” to meet the reduced values. This also tells us that the consumers are not exactly crawling over themselves to buy. They realise that a large Black Sea crop will, at least in the short to mid term, result in flat to lower values, no panic….. yet.
The big question is how the Russian spring wheat crop fared during a very wet planting period. Are the acres there, will the yields compensate for the lower area, if it is a lower than predicted area, and will the Black Sea crop counter reductions in the USA, EU, Argentina, Australia and Canada, all be it that some of those forecast reductions are currently not a small as they were 2 months ago.
The EU is probably the one to watch over the next 30 days. French harvest is progressing quickly, more heat next week should see it near completion. The German wheat crop is just cranking up and we already see reports of yields 20% under last year. These are early fields, the fields that were probably seeing a smaller impact from the prior heat wave. So it will be interesting to see what yields are like in Germany and Poland in a couple of weeks. The French wheat crop rating will be updated tonight. Reports out of Great Britain are also painting a bleak picture for winter wheat and barley yields.