Global wheat market down on good crop in Southern hemisphere

Global wheat market down on good crop in Southern hemisphere; bulls should watch weather and Russia-West talks started today

Global wheat prices continued to move lower in January. On Friday, Chicago SRW closed at $7.58/bu ($279/mt; -1.6% YTD), Matif – at €274.5/mt ($312/mt; -1.4%). Chicago Black Sea wheat was down 1.6% to $329.5/mt. 

The wheat market was under pressure of a good crop in the Southern hemisphere. Australia and Argentina are finishing the harvest of record-high crops.

On Friday, wheat closed higher thanks to some profit-taking ahead of the weekend. It looks like that trend continues today, on Monday.

The weather has been challenging recently for corn in parts of South America and winter wheat in the US. However, the precipitation outlook for Argentina and the southern part of Brazil is improving. Temperatures in HRW states are on the rise, lowering the risk of winterkill. 

The weather setup remains friendly for the Black Sea wheat, especially for the Russian South. There are no threatening temps with precipitation close or above average. Of course, it’s too early to talk about a good crop, i.e. last year things started to worsen rapidly closer to the end of the winter and beginning of the spring. 

We remain bearish wheat but continue to keep an eye on South American weather as problems with corn could be supportive for wheat. 

Russia-West-Ukraine tensions also remain on the agenda. Russia-US talks started today in Geneva. It’s hard to expect a breakthrough while we do believe that any open conflict will provide substantial support to global wheat prices.

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