US wheat futures have rallied by 9 per cent in the past fortnight to the highest level in 10 months as traders closely monitor adverse weather conditions across multiple countries, including Australia.
International prices have been in decline for five years on a series of bumper world wheat crops, underpinned by massive increases in Russia’s wheat output.
But the recent trend of ever-increasing global wheat output is almost certain to end this year as weather threatens crops in Australia, Russia, Canada, as well as the United States.
Global markets are becoming more sensitive to weather in Russia which accounted for more than a fifth of the world wheat exports in the 2017/18 season.
Old and new crop grain prices remain firm as domestic grain consumers stare down the barrel of another season of acutely tight supplies.
Russian wheat prices rallied last week as forecasters downgrade expectations for the coming harvest which will commence in less than a month.
Last week the Russian Ag Ministry lowered its forecast for the 2018 grain harvest by five million tonnes to 110 million tonnes, citing problems with the spring wheat crop, sharply down on last year’s record harvest of 135 million tonnes.
Russia’s spring wheat plantings are lagging where cold, wet conditions have slowed seeding – with some of the intended plantings already in doubt.
Persistent dry weather is also threatening Russia’s winter wheat yields.
World wheat buyers have been feasting on cheap Russian wheat supplies in recent years following a succession of record harvests, but are becoming nervous that supplies will tighten in the coming season.
South East Asian wheat buyers have already reportedly secured upwards of one million tonnes of new season’s Black Sea wheat but sellers are becoming harder to find.
Concerns over Australia’s 2018 wheat crop continue to intensify as the dry weather continues.
It’s likely that less than a fifth of the country’s intended wheat plantings will have emerged at the start of winter.
A much larger area has been planted but this is still waiting for rain to germinate.
The Australian Bureau of Meteorology reported that Queensland and New South Wales have received between 30 per cent and 60 per cent of their average rainfall over the past year.
This has led to long-term deficits in both groundwater and surface water.
They also said the drought-affected areas in Western Australia have received less than a third of their average rainfall.
Hopes of late autumn rainfall have now vanished, leaving farmers sweating on winter rainfall to germinate dry planted crops and complete the rest of seeding.
New South Wales farmers have endured one of their driest autumn seasons in recent years with some reporting they have recorded upwards of 100mm less rain during this time than their longer-term average.
Old and new crop grain prices remain firm as domestic grain consumers stare down the barrel of another season of acutely tight supplies.
Southern Queensland prices appear to have plateaued or even eased in the past week on reports that deals to bring a ship interstate with wheat to Brisbane have concluded.
On farm grain prices through New South Wales remain firm with wheat and barley from the Riverina and Central West being sold for $350 ex-farm.
