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Wheat’s record run finally stalls

It was another volatile week of price action for the wheat market, which has seen much more price movement over the last few weeks than corn or soybeans. For the week, Kansas City May futures were down $1.25/bu and $2.10/bu off the early week high. Minneapolis May was down 77¢ on the week, and down $1.52 off the high, while Chicago May was down $1.03/bu and a whopping $3.60/bu off the new all-time highs from Tuesday.

Corn and soybeans had a milder trading week, with corn up 8¢ and soybeans up 16¢ on their May contracts.

As the war drags on, the market is still trying to figure out the implications of the absence of Ukraine and Russian exports of major and minor grains and oilseeds. The panic of last week stretched into early this week before seeing the rally finally peak – for now. Obviously, the longer the war lasts, the longer prices will stay high, and volatility will remain elevated.

Traders are now looking at potential disruptions to spring grain planting and/or winter wheat harvest in Ukraine. The Ukraine government is granting farmers deferment from military duty with planting set to start in just a few weeks. Russian fieldwork will likely progress normally, but market outlets will be limited for old- and new-crop supplies.

Russia announced this week its intention to halt sales of wheat to other Eurasian Union countries (e.g., Armenia, Kazakhstan, Kyrgyzstan, and Belarus) to stop them from reselling that wheat into other export markets without the tax that Russia imposes on other countries. They suspect Kazakhstan of being the biggest perpetrator.

Late this week, the U.S. revoked the Most Favored Nation status of Russia, allowing yet more sanctions to be imposed. While there is ample evidence of the sanctions crippling Russia’s economy, it clearly isn’t slowing Putin down.

Cash markets have begun to trade again after many had simply pulled their offers amid the market chaos of last week. While futures soared higher last week and early this week, basis plummeted. Now, we see basis recovering while futures plummet as demand shifts to U.S. markets, primarily for corn.

The sudden loss of Ukraine corn caught China by surprise as they had about 5 MMT purchased that will not be delivered. Amid already tight feed grain supplies within China and across the globe, there are few alternatives other than the United States until Southern Hemisphere supplies come online this summer. Wheat demand will shift to the U.S., EU, Canada, and Australia. Our huge price rally had priced us out, but this week’s break should get us back into alignment with other global sellers.

Export sales last week were huge for corn and soybeans but not that impressive for wheat. Corn sales at 2.2 MMT were a market-year high, with 800 TMT going to unknown (probably China). Soybeans also had a huge week with 3.1 MMT sold (China took 1.1 MMT and unknown took 334 TMT). Wheat, however, only had 370 TMT sold. The pace of sales for corn and soybeans are ahead of the pace needed to meet USDA’s projections, while wheat is running a full 10 points behind. The market expects sales to pick up as buyers shift origins, but that shift is taking far longer for wheat than the row crops.

March Supply/Demand Report

USDA released the March Supply/Demand report this week, giving expected adjustments but just not to the degree anticipated. They took a stab at adjusting numbers due to the Black Sea war, but it is anybody’s guess where those numbers will end up.

U.S. wheat imports were lowered 5 million bushels (all hard red spring), exports were lowered 10 mb, and ending stocks raised 5 mb to 653 mb, still down 23% from last year. Average farm price was increased 20¢ to $7.50/bu. Australia’s production was increased 2.3 MMT to a new record 36.3 MMT with their exports up 2.0 MMT to a record 27.5 MMT. Ukraine had their exports lowered 4 MMT to 20.0 MMT, Russia’s exports were lowered 3.0 MMT to 32.0 MMT. India’s exports were raised 1.5 MMT to 8.5 MMT. Due to the drop in projected exports, world end stocks were increased 3.3 MMT to 281.5 MMT.

For U.S. corn, ethanol grind was increased 25 mb to 5.35 billion bushels; exports increased 75 mb to 2.5 billion; end stocks lowered 100 mb to 1.44 billion and average price increased 20¢ to $5.65/bu. Argentina’s corn production was lowered just 1 MMT to 53.0 MMT, while the Rosario Grain Exchange (Argentina’s version of USDA) lowered it to 47.0 MMT. That is a big difference for this late in the growing season. USDA kept Brazil’s corn production at 114 MMT, while CONAB (Brazil’s version of USDA) has them at 112 MT. USDA projects Brazil will export 43 MMT of corn while CONAB is at 35 MMT. Again, big differences between these estimates. USDA lowered Ukraine’s export projection by 6 MMT to 27.5 MMT.

The crop report inched closer to most private estimates’ numbers, but they still have a way to go before fully factoring in the drought in South America and the massive uncertainties surrounding the Black Sea war.

While weather is improving in South America, it remains dry in the U.S. Southern Plains. Rains that were forecast for the Western Plains do not appear to be coming, and so we see the drought staying put as the hard red winter wheat crop breaks dormancy. Crop condition ratings for Kansas dropped another point to just 24% good/excellent, Texas also lost 1 point to a mere 7% good/excellent, while Oklahoma gained 4 points to 15% good/excellent. This crop is going to be in rough shape to start the season.

Technically, wheat prices finally ran out of steam after setting new record highs on the Chicago market. We’ve seen a quick retracement with Kansas City and Chicago pulling back 50% from the February low. Minneapolis came back to its breakout level, which was easier to do since it hadn’t rallied nearly as much as the winter wheat markets.

I think wheat will come back to at least test this week’s highs, probably in the early May time window – likely around the crop report. I look for corn and beans to continue higher as they secure acreage – again looking for a top into early May.

Editor’s Note: Louise Gartner owns and operates Spectrum Commodities. She has been in business since 1988, specializing in grains and cattle while providing analysis, risk management, and hedging/trading assistance. You can listen to her podcast on wheat and cattle at

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