Market Morsel: Keep an eye on Russia for wheat clues.

Grain | 20th May 2024 | By Andrew Whitelaw

Market Morsel

We have spoken a lot about the impact of Russia on global grain markets, including our predictions of what could be an effective OPEC of wheat led by Russia in the event of their winning the war (see here).

This year, they have struggled with low rainfall in many places, but there are also reports of frost impacting crops. These weather events are leading to falls in wheat production.

The first chart below shows the USDA forecasts for Russian wheat production, which are at 88mmt. This is a fall from 91.5mmt last year. It is important to note that this would still be the third-largest Russian wheat crop. What are their stockpiles like? Are they high or low?

The Rusgrain Union has estimated the wheat crop at 86.8mmt, and Sovecon has dropped production to 85.7mmt.

The wheat price in Russia has increased in recent weeks as concerns started becoming noted of their conditions. This will be a good barometer of whether the crop is going well or badly.

This is what will drive our Australian prices, not the US, but what happens in Russia.