Canada Markets

It seemed there was endless bad news for the global wheat market this week, but they say the market is the market and global futures seemed to take the news in stride and could signal prices are close to finding a bottom.

March 11 marked a third consecutive day of announcements of U.S. Chicago soft red winter wheat sales to China being cancelled, totaling 504,000 metric tons. We have since learned that China has also cancelled soft wheat purchased from France, while 2023-24 ending stocks in France have been estimated at a 19-year high. On March 14, media indicated that Australian wheat sales to China either postponed or cancelled may be in the neighborhood of 1 million metric tons (mmt).

While global export prices bears watching, weekly International Grains Council price data as of March 13 shows Russian trade of 12.5% milling wheat unchanged at $199/mt USD, unchanged from the previous week. Of the 13 locations and wheat classes tracked by the IGC on a weekly basis, seven were shown to have increased in price from the previous week while two were left unchanged.

The monthly IGC forecast shows global ending stocks of wheat at 267 mmt for 2023-24, a five-year low, while their latest forecast for 2024-25 shows stocks falling by 5 mmt to 262 mmt. The USDA's current global stocks estimate for 2023-24 shows the smallest stocks since 2015-16, or eight years.

While U.S. wheat futures closed lower for the third or fourth consecutive session on Friday, the Chicago soft red winter wheat future has not tested the contract low reached on Monday. It is interesting to note that in March 11 trade, the third consecutive day of U.S. sales cancellations announced, the May reached a fresh contract low, while price rallied for a gain of 9 1/2 cents to form a bullish outside reversal bar for a second consecutive session and the largest daily gain in 14 sessions. Despite further negative news over the week, SRW did not return to test Monday's contract low.

Nearby futures for hard red spring wheat and hard red winter wheat have also held above their contract lows, reached on Feb. 26 and March 6, respectively.

European milling wheat also showed interesting price action this week, closing modestly higher on Friday and for the third time this week, ending close to the contract's 20-day moving average, while posting a second consecutive weekly gain.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com.

Follow him on X, formerly known as Twitter, @CliffJamieson.

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