Written Commentary
London Wheat Report
The past week has seen combines slowly starting to nibble winter wheat across the UK with the new crop beginning to feed into the market. Less that desirable harvest results so far this year in mainland Europe have reduced bearish sentiment produced by a culmination of strong harvest prospects and progress in the US and a steady flow of cheap Black Sea grain entering the market. These factors have seen global wheat markets decline 4.5% over the past 7 days.
In addition to wheat, Chicago corn and soybean futures dropped today – trading near their lowest since 2020 (as seen in the below graph). U.S. crop ratings and weather charts reinforced expectations of bumper harvests whilst worries of wavering Chinese demand compounded fears of a potential glut. Corn ratings improved 1% to 68% G/E vs. expectations of dropping 1%. Some suggesting that current ratings could mean an overall US yield of roughly 183.5 bpa vs. the July USDA forecast of 181 bpa.
Source: Refinitiv
Argentina, a key global wheat exporter, has reportedly not been so lucky with its wheat crops. Freezing temperatures over the main agricultural regions at the start of this week exacerbated poor conditions in the already droughted area. This will no doubt raise questions over the condition of its 2024/25 wheat crop.
Japan is due shortly to tender for just shy of 120,000 tonnes of wheat – likely originating from United States, Canada and Australia. This will act as an interesting litmus test to see where global prices lie without the skew of Black Sea wheat.
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