Spotlight on wheat market

Spotlight on wheat market

• The SAFEX wheat prices had a good run on Friday’s trade session and settled in positive territory, with spot price at R3 855 per tonne. The gains were in line with higher Chicago wheat prices, as well as commercial buying interest.
• The Chicago wheat market was supported by lingering concerns about unfavourable weather conditions in the central and eastern parts of Europe, US Plains, Australia, Canada and Russia. This could potentially lead to a decline in wheat yields in the 2018/19 production season.
• In Russia, the US and the EU region there are already expectations of lower yields. Last week, International Grains Council (IGC) placed Russia, US and EU’s 2018/19 wheat production at 75 million, 46 million and 149 million tonnes, respectively down by 12 percent, 2 percent and a percentage point from last season.
• The other countries that are expected to register a decline in production in the 2018/19 wheat production season are China, India, Ukraine and Kazakhstan. This is partly underpinned by an expected reduction in area planted and prospects of unfavourable weather conditions in some regions.
• Meanwhile, Australia and Canada are expected to receive fairly good harvests despite the unfavourable weather conditions experienced last week. The IGC forecasts Australia and Canada’s 2018/19 wheat production at 24 million and 31 million tonnes, up by 15 percent and 4 percent from the previous season, respectively.
• Overall, from a global perspective, the aforementioned potential decline in production will somewhat be offset by increases in Canada, Australia and Argentina. The IGC forecasts 2018/19 global wheat production at 748 million tonnes, down by 2 percent from the previous season.
• Back on home soil, the weather remains a key focus in winter wheat growing regions. The winter wheat planting has already been completed in regions around Swartland and Overberg. The crop has emerged, thanks to light showers received in the past few weeks, although these were not sufficient to improve subsoil moisture levels. The Western Cape province needs to receive intense and persistent rainfall for subsoil moisture to improve, which will, therefore, benefit the new season crop.
• The areas that have not made notable progress regarding planting is the Southern Cape due to persistent dryness.

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