According to Mercantile, the weather and political uncertainty are supportive for the markets. The market is watching the dry conditions in Russia and the EU. Meanwhile, estimates for Russia’s wheat crop remain big. Mercantile says there was good tender business last week, but the results continue to signal strong supplies in the Black Sea and Balkans. Meanwhile, spring wheat crops in the Northern Hemisphere, especially Canada, are facing weather challenges. Mercantile would not sell wheat for now.

Mercantile says harvest of, what is expected to be a strong new crop in the Northern Hemisphere, is approaching rapidly. Dry conditions in the northern U.S. and Canadian prairies are supportive for high protein wheats, but this can be eased with rain. Mercantile would be sold out of old crop wheat and would hold new crop wheat sales for now.

According to Mercantile, futures markets are acting like they have founda bottom. Meanwhile, cash markets are being pressured by the volume of new crop wheat that is jostling for demand. Increasingly dry conditions in the Canadian prairies have the market on edge, says Mercantile. The next USDA report is out on Thursday. Traders expect the USDA will increase U.S. wheat stocks for ‘24/25 while lowering them for ‘25/26, while global ‘25/26 stocks are expected to be lower. Mercantile would not sell wheat for now.

According to Mercantile, thin demand ahead of the Northern Hemisphere harvest is presently the prime focus, but hi-pro supplies in North America is dwindling, and the new crop could be under threat. Building heat and dryness in the Northern U.S. shocked initial U.S. Spring wheat ratings, while there is no visible change to the dryness in China. Meanwhile, Mercantile says India is projecting a record crop. Mercantile would look for hard wheat to go higher.

According to Mercantile, there is an increasing number of production challenges arising, and the wheat market will increasingly focus on the weather. Mercantile says the trade is watching how production issues in some areas (Russia, China), will come against strong crops in other regions (the U.S., eastern Europe). Mercantile would continue to hold wheat sales for now.

Mercantile considered the WASDE bearish on wheat although it’s a long time before it is in the bin. World disputes continue, U.S. stocks are expected to rise, and U.S. wheat is very competitive and is attracting strong new crop demand. Mercantile says the UDSA expects imports by some of Canada’s top customers will be higher in the upcoming year (Indonesia, Philippines, Bangladesh, China) which could provide an opportunity for Canadian exports. Mercantile would leave the markets alone for the present.

Mercantile has a new WASDE report this Monday, where they expect the USDA to increase stocks and improve expected supplies of new crop wheat. Mercantile anticipates new crop markets to be a little lower, but old crop should strengthen with buyers coming back in. Mercantile doesn’t see any large moves by Funds and would remain non-sellers of Canadian wheat.

According to Mercantile, it was a slow week as various parts of the world take May 1, 2025, as a holiday. In the markets, soft red wheat easily remains the world's cheapest wheat and funds hold record shorts, but dryness issues persist in areas of Europe, parts of Russia and Ukraine, parts of Canada, and China. Mercantile says wheat could take a further rally and increase its value relative to corn. Mercantile would hold spring wheat sales for now.

According to Mercantile, Australian futures fell another A$6/mt as the AUD made a new four-month high close, while MATIF fell to new contract lows on slow demand, high stocks and generally favourable weather conditions. Rain has largely subsided weather concerns in most of the major wheat origins. So, Mercantile says world wheat markets remain under pressure by the absence of significant weather issues facing Northern Hemisphere crops and by slowing exports. However, Black Sea weekend forecasts are more widely dry and as prices retest lows, some short covering would not be a surprise.

Apr. 21