Late last week the wheat market took off after Russia announced it would need to import grain. This has cast further doubts on the availability of FSU grain supplies. Ukraine is already applying administrative measures (carefully avoiding contravening WTO trade rules) to ensure they have ready supplies for their Russian friends.
Early in the week prices were further supported by harvest results in Russia that are confirming grain production at the bottom end of official estimates (60mmt vs 100mmt last year).
In western Europe, wet weather is hampering harvest progress and will likely lead to some quality downgrades. For this reason, European traders are avoiding selling wheat against quality specifications. They are keen to sell feed wheat at current prices. Competition from the US is hampering efforts to force buyers to pay more in what is a quiet market.
The results of the Egyptian wheat tender gave us a fair idea of the state of play. It saw good competition with US wheat missing out to French and Canadian supplies, which confirms there is no shortage of willing wheat exporters outside of the FSU.
Corn and soybeans seem to have divorced from wheat for the time being, but will have to push up closer to wheat before nth hemisphere planting later this year.
Whatever way you spin it, this market is still suggesting to sell wheat. While the seasonal situation in WA limits options available to WA growers, production potential is building on the east coast. Hopefully forecast rain lands in WA this week to allow WA producers to restart their marketing programs.
International markets are starting to build a risk premium for problems in the southern hemisphere with both WA and Argentine production looking shaky.