Wheat Market Outlook and Prices

The Wheat Market Outlook is provided by Mercantile Consulting Venture Inc.

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World Wheat Overview:

Focus on Algeria:

algeria-wheat-imports-by-origin

  • According to the USDA Attaché Post, Algeria’s grain planting season started under favourable conditions and adequate rainfall. Area planted to grain is up 3% from last year at 3.55 mln ha. Usually durum and barley are planted over wheat because of their climate. Over the past decade, grain production has increased over the 10-year average of 2.97 mln mt, but it still far short of domestic consumption needs.
  • Algeria will continue to import wheat (esp. common wheat), and less so durum and barley. Post believes that Algerian all wheat imports for 2018/19 will fall 600k mt to 8.1 mln mt and will continue to fall to 8 mln mt in 2019/20 as the country implements policies that will reduce its reliance on imports. Imports into the country will be weather driven. In 2018, the US supplied 6.2% (4.3 mln mt) of Algeria’s common wheat imports, Canada supplied less than 0.5% (262k mt).
  • Durum: 10-year average Canadian durum exports to Algeria amount to 748k mt annually, but have been somewhat variable, ranging from 140k mt in 2010/11 to 1.3 mln mt in 2016/17.  YTD Cdn. durum exports (to end Feb.’19) have only reached 140.4k mt, and we project full crop year durum exports to Algeria at max. 240k mt for this year due to an above average domestic production in Algeria. The quality of the domestic durum is far less than Cdn. quality, but the Algerian Gvmt. has been urging domestic mills to use domestic wheat. The 2019 crop looks again promising so in terms of expected volume produced, which would again limit Cdn. exports of durum into Algeria.

canadian-durum-exports-to-algeria

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Wheat Market Outlook

Significant events:

  • US wheat markets posted another round of steep losses. EU, Black Sea and US wheat crop prospects are all looking good and there is nothing to convince speculators to cover shorts.
  • Private estimates of the Russian wheat production potential continue to rise.
  • While even lower price levels for Russian old crop wheat are not finding any fresh business, on new crop, the Fob inverse makes Russian wheat once again the world’s cheapest origin wheat!
  • US winter wheat G/E ratings of 60% are very strong, 29% higher than last year and 16% above than the 5-year average.
  • Wheat seeding in Australia will begin shortly and with El Nino weakening, there are hopes for a more normal crop this year although current soil moisture levels remain very low.
  • The German 2019 wheat crop is currently seen 21% higher than last year’s drought-stricken crop at 24.4 mln mt.

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Primary Elevator Bids

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Primary elevator bids data source: PDQ

Grade Spreads in Canadian Dollars

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Relevant FOB Prices and Calculated Basis

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CLICK HERE to learn what the basis is and why it is important.

 

 

 

adobe-acrobat-pdf-file-512 CLICK HERE for the full report in PDF.

For the archived wheat market outlook and price reports, please CLICK HERE

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