Wheat Market Outlook

Oct. 6

Market Outlook – Wheat

Wheat futures markets remain at levels not seen in around five years. New contract lows were made once again for both European and North American futures. Wheat markets have been digesting the larger crop sentiment for about a month now and there is a good understanding that the Australian and Argentinian crops will be of good quality. We have seen a stabilizing and even a slight increase in some cases in global wheat bids from export locations and there is the rolling idea that although many key regions are behind on exports, we know that import demand is forecasted to come to the market by many key agencies. Algeria’s large-scale purchase of 600,000 tonnes and some other more business being completed at these levels has importers beginning to see the value of the crop available to them. This reinforces that the market is of the notion that although global crop sizes have increased, global demand is still there. We remain hesitant to make major sales at the current time amidst harvest pressure and typical seasonality of markets.

Market Outlook – Durum

Canadian crop size has been increasing as producers get into harvest with Statistics Canada estimating the crop at 6.5 mmt up from 6.1 mmt in the August estimate. The crop size is larger than last year's total volume. Global import demand is expected to drop from 9.2 mmt last year to 8.6 mmt this year, larger global production being penciled in at 37.2 mmt vs last year's 36.4 mmt of which Canada will account for 6.5 mmt of that. EU crop is at 8.3 mmt vs 7.2 mmt last year. Ending stocks this year are expected globally at 7.5 mmt vs 6.7 mmt last year and Canadian durum will need to be competitive. Early exports of Canadian durum have been strong and pricing well into EU and North Africa. We are watching this trend closely and keeping an eye on export shipments in a proactive manner to analyse the movements.

Market Outlook – Wheat

Wheat futures markets to levels not seen in around five years. Wheat markets have been digesting the larger crop sentiment for about a month now and there is a good understanding that the Australian and Argentinian crops will be of good quality. We have seen a stabilizing and even a slight increase in global wheat bids from export locations and there is the rolling idea that although many key regions are behind on exports, we know that import demand isforecasted to come to the market by many key agencies. The market is of the notion that although global crop sizes have increased, global demand is still there. We remain hesitant to make major sales at the current time amidst harvest pressure and typical seasonality of markets.

Market Outlook – Durum

Canadian crop size has been increasing as producers get into harvest, with Statistics Canada estimating the crop at 6.5 mmt up from 6.1 mmt in their August estimate. The crop size is larger than last years’ total volume. Global import demand is expected to drop from 9.2mmt last year to 8.6mmt this year, with larger global production being penciled in at 37.2mmt vs last year’s 36.4mmt of which Canada will account for 6.5mmt of that. The EU crop is estimated at 8.3 mmt vs 7.2 mmt last year. Global ending stocks this year are expected to be at 7.5mmt vs 6.7 mmt last year and Canadian durum will need to be competitive. Quality of durum unharvested in thefields of the Canadian prairies could become a market factor if we begin to see degrading factors from the durum crop that was yet to come off before the rain event.

Market Outlook – Wheat

Wheat markets continue to grind near their contract lows on the futures markets and sit at levels which were previously seen in early 2021. Markets have a better understanding of wheat supplies now that the European, Black Sea, United States and Canadian crops are either off or close to wrappingup their harvest season. Recent USDA, Statistics Canada, ABARES and private reports confirm that global supplies have grown from earlier season reports. Australiancrops look favourable and have seen some major improvements in the past two months. The Argentinian crop looks great and that story will play out in the coming months as well. There is a lack of any major concerns for the market to work with right now and it has kept any movement sideways to lower. Demand is the item being watched as export pace is slow in some regions and reports of buyers remaining on the sidelines seeing how low prices may move before making any major commitments. With supplies relatively well understood, we will need to see stories build on the demand side. The next thing the market will watch as we move throughout the calendar will be EU and Black Sea winter crop planting. Nothing major to report there yet.

Market Outlook – Durum

Canadian producers will need to see strong export demand throughout the marketing year. Canadian durum is expected to be of good quality for export but will need to remain competitive globally. European production is estimated at 8.3 mmt vs last years’ 7.2 mmt which has weighed on EU prices. Global durum carryout is expected to jump to 7 mmt,up by 400,000 tonnes over last years’ ending stock estimate. Canadian durum crop size estimated by the International Grains Council (IGC) is at 5.8 mmt. However, Statistics Canada’s latest release has the figure closer to 6.1 mmt.Canadian durum values are under harvest pressure as supplies become available to the market. 

Market Outlook - What to Watch with Wheat

• Wheat markets continue to grind near their contract lows on the futures markets and sit at levels seen back in early 2021. Markets have a better understanding of wheat supplies now that the European, Black Sea, United States and Canadian crops are either off or close to wrapping up their harvest season. The Australian crop looks favourable and has seen some major improvements in the past two months and the Argentinian crop looks great. Demand is the item being watched as export pace is slow in some regions with reports of buyers remaining on the sidelines seeing how low prices may move before making any major commitments. With supplies relatively well understood, Exceed will need to see stories build on the demand side. The next thing the market will watch will be EU and Black Sea winter crop planting.

Canadian producers will need to see strong export demand throughout the marketing year. Canadian durum is expected to be of good quality for export but will need to remain competitive globally. European production is estimated at 8.3mmt vs last years 7.2mmt has weighted on EU prices. Global durum carryout is expected to jump to 7mmt, up by 400,000 tonnes over last year's ending stock estimate. The Canadian durum crop size is estimated by the IGC at 5.8mmt but Statistics Canada’s latest release has the figure closer to 6.1mmt. Canadian durum values are under harvest pressure as supplies become available to the market. Statistics Canada stocks report released tomorrow, September 9th, will be closely watched by market participants globally.

Market Outlook – Durum

Canadian producers will need to see strong export demand throughout the marketing year. Canadian durum is expected to be of good quality for export but will need to remain competitive globally. European production is estimated at 8.3mmt vs last years 7.2mmt has weighted on EU prices. Global durum carryout is expected to jump to 7mmt, up by 400,000 tonnes over last year's ending stock estimate. The Canadian durum crop size is estimated by the IGC at 5.8mmt but Statistics Canada’s latest release has the figure closer to 6.1mmt. Canadian durum values are under harvest pressure as supplies become available to the market. Statistics Canada stocks report released tomorrow, September 9th, will be closely watched by market participants globally.

Market Outlook – What to Watch with Wheat  

• Markets have a much better understanding of total global supplies in major regions vs just one month ago. Canadian and U.S. wheat harvest will be off shortly, EU and Russian crop sizes well understood as well. After the North American crop is off there will be a few key southern hemisphere players. Australian crop prospects have improved significantly since spring although their major harvest is still a few months away. The Argentinian crop is looking excellent as well. The market will look for demand stories to give traders confidence that the market is finding a home for the crop that is being made available.  We have seen west coast North American FOB bids stay relatively steady recently while European / Black Sea quotes pull back slightly as they try to generate demand for their freshly harvested crop. 

Market Outlook - Durum

Export demand is anticipated to be lower from Canada due to the better European crop and lack of major production issues in the North African crop. Crop size from Statistics Canada is placed at 6.08 mmt. The crop has seen domestic bids fall week over week. Larger European Union crop availability will keep a lid on market appreciation and Canadian durum values will need to be competitive to gain sales throughout the crop marketing season.   

Market Outlook - What to Watch with Wheat

North American Spring Wheat harvest

• A dry stretch of weather in the Prairie provinces is expected this week which will help push crop maturity as we begin the last week of August. The U.S. crop is over half off and the story will be well-known on the crop shortly. Limited issues arising so far in the North Dakota, Montana and Minnesota crop leaving few surprises to the market so far.

Market Outlook – Durum

Prairie crop size and quality will be very closely watched and will influence market direction. Export demand is anticipated to be lower from Canada due to the better European crop and lack of major production issues in the North African crop. Sask Ag is reporting an increase in durum crop conditions for Saskatchewan in what was to be their last crop conditions report prior to harvest. Quality and yield will be the market drivers in durum as the Canadian harvest is next up on the docket. At this point in the crop season, we would like to see crop quality and quantity before making next sales on the new crop. Early harvest of durum is just underway, but more will be known within the next 10 days. 

Aug 18

Aug 11

Global wheat values have been trading mostly lower in recent weeks due to harvest pressure and lack of any bullish market stories that could essentially change the markets overall sentiment on the current situation. All eyes are on the Western Canadian crop for Durum.  The crop size and quality will be very closely watched and will influence market direction. Export demand is anticipated to be lower from Canada due to the better European crop and lack of major production issues in the North African crop. Sask Ag reporting an increase in Durum crop conditions for Saskatchewan in what is expected to be their last crop conditions report prior to harvest. Quality and yield will be the market drivers in Durum as Canadian harvest is next up on the docket. Exceed is hesitant against making any additional new crop sales on wheat right now as market prices leave little to no profit on an average wheat crop. If Exceed sees some appreciation in new crop basis or futures, they will consider a sale.