Grain Snippet: Aussie Wheat Holds Up Despite Global Market Uncertainty
Global wheat futures have been pressured on the recent news of working towards a Black Sea partial cease-fire, with the intent by the US and Russia, to re-open the Black Sea Grain Corridor. This was announced by the White House on the 25th March 2025. The simmering of tensions would likely lower CIF Black Sea grain prices, due to a decrease in freight insurance potentially falling by US$0.50-2.50/MT. However, the EU notedly rejected Russia’s demand to lift sanctions as a part of this agreement, with the EU stating sanctions will remain until an unconditional withdrawal of Russian troops for Ukraine.
Currently Russian wheat is offered circa US$252/MT FOB, up US$3/MT over the last half of March; the increasing FOB price has been due to tightening stocks along with negative export margins. When this is combined with a strengthening Ruble and their export tax, their global competitiveness has been reduced on the world stage. Private forecasts for Russian wheat exports in the 24/25 season have been reduced by 1.5MMT to 40.7MMT. This is lower than the 52.4 MMT shipped last year and the five-year average of 40.9 MMT.
US SRW futures have been under further price pressure from improved rain forecasts for the US Plains. Funds have rebuilt their short position to once again to sit around record net-short levels. Spring is a critical time for Northern Hemisphere winter wheat crops; US futures markets will be prone to fund short covering on any key exporter production supply shock. We have seen an erratic market of late, as it is thrown around by competing interests (tariffs, war negotiations and weather). This volatility is indicative of a market that is confused where wheat’s true value lies.
Stocks-to-use for the major wheat exporters remains historically tight but has been revised upwards once again for the fifth USDA report in a row, to now sit at 15.25%. Whilst this remains at historically tight levels, the loosening of stocks-to-use has seen funds less anxious and have subsequently been willing to add to their net-sold position, bringing the benchmark US wheat prices broadly lower.
Despite the decline in US wheat futures, with high volatility driven by concerns over a potential global trade war, both SA and Vic wheat prices have continued to outperform. Local basis has strengthened as a result, with ADE basis circa 55c and PTL circa 65c. Local wheat prices remain supported by stronger exporter activity on the SA stem since harvest lows, improved exporter engagement, rising Russian FOB prices, and a historically weak Australian dollar.
Domestically, Australia continues to see dry weather over the southern states, with some small rain events occurring in certain areas, but soil moisture remains minimal as seeding time approaches. With such low subsoil moisture, it would appear that we would need above average rainfall over the growing season to get an average yield and improve grower confidence for the season ahead.
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.