Grain Snippet: Futures Fall Whilst Aussie Wheat Holds Firm
US wheat futures remained in a medium downward trend through April due to favourable precipitation in late April in key winter wheat growing regions in the US. According to the latest crop conditions report, 51% of the US winter wheat crop is rated Good to Excellent, 2 points above last year and 10 points above the five-year average. While the IGC projects US wheat production for 2025/26 at 50 MMT, a 2 MMT decline year on year, it still represents a solid outlook compared to the five-year average of 48.4 MMT.
For old crop wheat in the 24/25 season, Russian FOB prices are reported at US$245/MT, down US$5/MT w/w. Prices have traded sideways from January to April 2025 due to ample Southern Hemisphere wheat production and large US wheat stocks. With current FOB prices, a strengthening Ruble, and tax changes, Russian wheat competitiveness has declined. A private forecast pegged Russian wheat exports at 40.7 MMT, down from 52.4 MMT last year and slightly below the five-year average of 40.9 MMT.
The stocks-to-use ratio for major exporters remains moderately tight at 15.85%. This is the sixth consecutive month the USDA has revised it upward. Notably, international wheat prices continue to decline despite the relatively tight stocks. The global wheat market appears more accustomed to the tight stocks scenario, reflected in weakening futures prices, particularly while many nations battle high inflation.
NH crop conditions are currently mixed for 25/26. Black Sea countries are experiencing dryness, while US and EU wheat crops are in good shape. Dry concerns have emerged in parts of the EU, China, and Turkey. So far, yields have not been significantly affected, but continued dry weather may pose risks. Russia’s main wheat growing region is expected to receive some rainfall, especially in the south. In contrast, low precipitation is forecast for main wheat areas in China, the northern EU, and the US.
Early estimates for Australian wheat production in 2025/26 range between 28.4 MMT and 30.1 MMT. WA and NSW have received sufficient rain for a good start, while SA and VIC still need more rain to reach average yields and boost confidence. The BOM outlook suggests a dry May, with better rainfall expected from June to August.
Despite the decline in US wheat futures, SA and PTL new crop wheat prices have outperformed. The local basis has strengthened, with ADE basis around 70c and PTL around 58c, placing them in strong decile rankings of 8.37 and 6.29 respectively. Prices remain supported by the drought outlook and historically weak AUD. For old crop, note that some bookings in Ade were deferred from early June to Jul/Aug. This was mainly motivated by tightening grower stocks, improved coverage on the shipping stem, and a comfortable supply from major exporters.
This is a sample only, if you would like to view the entire document and our recommendations, please contact CloudBreak to discuss becoming a member on (08) 8388 8084.