Grain Snippet: Wheat Prices Fall on Sluggish Demand
September was marked by a sharp decline in global wheat prices, with Dec-26 US soft red winter wheat futures falling by 67 USc/bu, equivalent to approximately A$37/MT. The decline was driven by renewed optimism surrounding Russia–Ukraine peace talks and sluggish demand for US wheat due to its elevated price. The latest USDA data show that US wheat export inspections for the marketing year to date total 6.34 MMT, approximately 34% behind last year’s pace.
On 23 September, US Secretary of State Marco Rubio said that Russia and Ukraine had expressed interest in a limited ceasefire involving grain and energy infrastructure. However, Russia had not publicly confirmed its willingness to accept the proposal, and no practical agreement had been reached. Meanwhile, continued attacks on vessels and port infrastructure have severely constrained Black Sea grain shipments. A private forecaster estimated Russian wheat exports at 5.4 MMT for July–September, down 53% y/y.
Compared with global wheat futures, SA and VIC wheat prices recorded relatively modest declines. Since early September, APW1-equivalent prices have fallen by approximately A$9–12/MT. A weaker Australian dollar following the US Fed’s September rate increase helped cushion local prices, while growing concerns about dry conditions across parts of the QLD and NSW wheat belts also underpinned Australian cash values. Consequently, SA and VIC basis levels have improved but remain historically weak at −53 USc/bu and −40 USc/bu, respectively. This means that SA and VIC wheat continue to trade at discounts to US wheat futures.
Locally, the wheat harvest is approaching. The September WASDE report revised Australian wheat production higher to 31 MMT, up 2 MMT from its previous forecast. Although this remains 5 MMT below last season’s bumper crop, it is still a sizeable volume compared with the 10-year average of 29 MMT. September rainfall was limited across SA, VIC, NSW and QLD, while conditions in WA were mixed. Given these conditions, the next Australian production estimate is expected to remain near 31 MMT. Looking ahead, the European weather model forecasts above-average rainfall across much of SA, VIC and NSW over the next fortnight. If this rainfall eventuates, it could improve crop conditions following a dry September.
Globally, the Canadian harvest is underway but has been delayed by recent heavy rainfall, which has also affected crop quality. Saskatchewan (46% of Canadian wheat production) has completed 31% of its wheat harvest, compared with 73% at the same time last year and a five-year average of 80%. Alberta (30% of Canadian wheat production) has also experienced delays, with harvest progress at 43.1%, compared with 88.8% last year and a five-year average of 86%. Looking ahead, weather forecasts indicate drier conditions through to mid-October, which could accelerate harvest progress.
Meanwhile, Canadian wheat exports have started the 2026/27 season at a record pace. Statistics Canada reported shipments of approximately 3.1 MMT, 68% above the volume recorded during the same period last year.
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