Wheat Market Outlook and Prices

The Wheat Market Outlook is provided by Mercantile Consulting Venture Inc.

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World Wheat Overview:

world-wheat-production-by-countryTop 25 wheat producing countries:

  • While US wheat production has been affected by drought, the US is of lesser concern to world production vs the EU, China, India, and Russia.
  • World wheat supply is expected to remain stable in the coming USDA WASDE report, with Russia projected to set second consecutive wheat production record according to all reports.
  • The USDA is expected to slightly reduce projections for global wheat production in upcoming WASDE report on August 10th, but global ending stocks are expected to remain relatively unchanged with only minor adjustments.
  • Funds: Index Funds did some profit taking in the past week, but we don’t see them reducing the size of their long. Specs and Spec funds were big sellers of corn and wheat last week based on increased estimates of Eastern European production.
  • Matif: Matif exchange in Europe closed at 163.25 which was down by 0.25 on Fridays trade, but down by 7.00 or 4.11% for the week.
  • Canadian wheat:
  • According to the CGC, producers delivered 315k mt of wheat into the handling system, which is down from last week’s 388k mt. Exports for week 52 were 247k mt, up from last week’s 200k mt, and down 11% (-1.8 million mt) from last year’s YTD exports.
  • Elevator stocks are currently at 2.99 million mt with 1.6 million mt at primary elevators and most of the remaining inventory at port.
  • The bulk of wheat inventory at port is located on the east coast with 130k mt at Thunder Bay, 596k mt at the St Lawrence, and 192k mt at Bay and Lakes. Meanwhile, the Pacific coast has only 307k mt at port, which is comparatively small.
  • Producers delivered 131k mt of durum into the handling system over the past week. Durum exports during week 52 amounted to 27k mt; 4.29 million mt year-to-date. This is very close to last years year to date exports of 4.36 million mt.
  • Manitoba’s harvest of winter wheat and fall rye has now begun in central regions of the province. Most of the province is reporting below normal precipitation and would benefit from additional rains. Most crop are off flower and are currently in the podding and filling stages of development.
  • The weekly Saskatchewan crop progress report indicates that harvest has now begun in some southern regions of the province with reports from these regions indicating average to below average yields. Most of the province had little or no rain over the weekly reporting period with many southern regions continuing to be in drought. Topsoil moisture across the province is now reported to be 29% adequate, 41% short, and 29% very short. Crops across the province are turning quickly due to warm conditions and dry weather.
  • The August 1st Alberta crop report indicates crop conditions have declined an additional 3% across Alberta. 57% of Alberta crops are now reported to be good or excellent, which is down from 60% good/excellent last week. Hot dry conditions continued in the southern and central regions of the province where crop condition ratings declined by 6% and 14% respectively. While rain is needed in both the southern and central regions, it is considered to be too late for crops in the southern region.

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Wheat Market Outlook

Significant events this past week

  • The stats Canada jobs report on Friday revealed the lowest unemployment rate in 9 years which is a sign of current economic strength. While the value of the Canadian dollar has dropped slightly against the US dollar over the week (currently at .7908 and down by 0.01385 for the week) the recent jobs report does lend some strength to the Canadian dollar against the US greenback. However, the August 4th US jobs report indicates that US unemployment also fell to 4.3% from last months 4.4%. While US unemployment was already at 4.3% in May, this was a 16-year low and it’s likely that both Canada and the US will continue with slow interest rate hikes to steady economic growth and combat inflation. Any hike in interest rates will increase the value of the currency in that country and will make that countries grain exports more expensive on the world market.

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Primary Elevator Bids

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Primary elevator bids data source: PDQ

 

Grade Spreads in Canadian Dollars

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Relevant FOB Prices and Calculated Basis

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CLICK HERE to learn what the basis is and why it is important.

 

adobe-acrobat-pdf-file-512 CLICK HERE for the full report in PDF.

For the archived wheat market outlook and price reports, please CLICK HERE.