Wheat futures markets fell heavily mid-week, losing almost 4% of their value. A number of changing elements led to this long liquidation resulting in the loss of all the gains made last month and the new record high prices. The fast-spreading Omicron variant of Covid-19 presents a host of uncertainties but will almost certainly result in lower demand as the hospitality trade once again has to manage lost business. However, there are changing fundamentals that point towards a more relaxed world wheat balance sheet with an increased supply from some of the world’s major wheat exporters. The Southern Hemisphere wheat producers, Australia and Argentina, will harvest record wheat crops with estimates for Argentina exceeding 22 million tonnes as its harvest reaches 65% complete. This compares with just 17.65 million tonnes harvested last year. This week, Algeria bought 700,000 tonnes of optional origin wheat which excluded its traditional wheat supplier France and added weight to the selling pressure for Paris wheat futures. The tender results included Argentina, which highlights the competitiveness of Southern Hemisphere wheat for the second half of the season.

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