The Grain Bullets
5 main drivers of the grain market
Pricing
CBOT wheat for the coming harvest fell last week, and was trading at an average of A$323, whereas the previous week it was trading at A$337. At a local level, prices have been slow to follow overseas values, and ASX wheat has remained at the same level as the prior week. This has meant that ASX basis has risen from A$9 to A$23 over CBOT. It wouldn’t surprise me if prices in Australia came under a little more pressure this week. The following bullet points outline the key market points.
Wheat Prices Retreat on Ceasefire and Bigger Harvests:
The wheat rally from Middle East tensions and fund short-covering reversed sharply as a ceasefire was reached and Russian harvest forecasts rose, with major analysts now expecting the crop at 83–85 million tonnes.
Northern Hemisphere Harvest and Export Trends:
Harvesting progressed in the US, EU, Ukraine, and Russia, with large new supplies putting pressure on prices. Ukrainian June exports lagged last year, while Russian wheat shipments increased, and US winter wheat harvests remained behind average pace.
Major Surprises in North American Oilseed Data:
Statistics Canada made a major upward revision to 2024 canola production, surprising traders and pressuring prices. Wheat, corn, soy, and lentil areas all rose, while canola and barley acreage fell; U.S. and Brazilian corn forecasts remained strong.
Weather and Crop Updates Across Regions:
The EU crop agency was positive on winter crop yields but warned of drought risks for spring crops in parts of Europe. India’s monsoon arrived nine days early, improving outlooks for key summer crops. Canadian rains eased some dryness but Prairie wheat ratings stayed below last year.
Geopolitical Volatility Remains a Key Market Driver:
Market volatility stayed high due to rapidly changing Middle East events, including US and Iranian military actions. Oil and wheat prices initially surged on escalation and short-covering, then quickly fell as ceasefire hopes and supply confidence returned.
