Home / Markets / Markets Analysis / Wheat market / Wheat finds positive reversal

Wheat finds positive reversal

02/18/2012 @ 2:56pm

Wheat markets were under pressure early in the week, only to find strong buying support as some months neared the trading range lows. A strong reversal on Thursday had nice follow through on Friday, and the week finished with reversals higher in all three wheat markets.

Pressure early in the week stemmed from moderating weather in the Europe and the Black Sea area and the long wait before assessing the cold damage, along with negative production estimates from Australia.

Australia estimated that wheat production will be another record high of 29.5 MMT, 1.2 MMT higher than USDA’s estimate and eclipsing last year’s record of 28.0 MMT. They also projected their exports at 22.3 MMT, up 1.3 MMT over USDA and roughly 4 MMT above last year’s pace. To the surprise of some, Australia also estimated that 75% of their wheat was milling quality, much higher than expected considering their wet harvest.

Export demand has picked up the pace over the last few weeks, primarily due to weather issues reducing production of corn and soybeans in South America and more recently winter kill concerns in some regions of Europe and the Black Sea.

For the first time in months, the US secured a sale of one cargo of wheat to Egypt last week. Thursday of this week we sold another 3 cargoes to them, and on Friday sold another 2 cargoes. We’re also seeing business increase for higher quality wheat, not only for US wheat but Canadian and Australian as well. Algeria, Saudi Arabia, Taiwan, Indonesia just to name a few all in for milling quality wheat. 

Some of the jump in business can be attributed to ports in Europe and Russia being frozen and vessels unable to load. We’ve seen traders have to switch origins at the last minute, with many coming to the US - bumping up basis bids for immediate delivery. 

We’ve also seen stepped up buying by China for US corn and soybeans, again mostly due to the productions losses out of South America. In their concern to secure adequate supplies, China inked the largest deal ever for US soybeans by buying 2.92 MMT, mostly new crop. 

Wheat also found support from a report on Friday that Ukraine’s government asked their grain exporters to limit the amount of wheat sold between February and July (the end of their marketing year) to only 1.7 MMT, which the traders agreed to do. 

CancelPost Comment
MORE FROM LOUISE GARTNER more +

Wheat Carves Out A Trading Range By: 08/29/2014 @ 2:09pm A couple of days this week saw stronger wheat prices, and it looked like the momentum would be…

Wheat Quality Story Builds By: 08/18/2014 @ 11:24am As the news seems to be improving in the Black Sea Region Monday, most of last week's wheat…

Early Wheat Rally Fades Late By: 08/08/2014 @ 3:46pm Early in the week we saw wheat prices surge higher, only to lose much of those gains as the week…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Soybeans Rally on Crop Disease Concerns