By US wheat futures continued their slide this week amid a strengthening dollar and wet weather in the US.
Wheat contracts on the Chicago Board of Trade slipped to a more than two-month low to its lowest level since September 3 on Wednesday.
Much of the slide has been due to a strengthening dollar after the US election outcome last week.
After Republican Donald Trump secured victory over Vice President Kamala Harris, the dollar surged, pressuring commodities from gold to oil and grains.
A stronger dollar makes it more expensive for overseas buyers to purchase US wheat, which limits demand in the already weakened market.
At the time of writing, the wheat contract on the Chicago Board of Trade was 538.88 cents per bushel, down 0.4% from the previous close.
Wet weather in the US
“Over the weekend, Kansas received 20-40 mm of precipitation, offsetting the moisture deficit accumulated over recent months,” SovEcon’s Managing Director Andrey Sizov, said in a report.
Kansas is the biggest wheat producer in the US.
Wet weather can damage wheat crops, especially during the ripening and harvesting stages. Rain can wash away wheat kernels, causing them to lose weight and quality.
However, in the US plains, rains can improve wheat crop quality.
Recent rainfall has quickly changed the direction of winter wheat crop conditions in the US central and southern Plains.
“Growers hope additional rain in forecasts signals a pattern change to pull those regions out of drought and promote emergence before the hard red winter wheat crop goes dormant and lessens the burden on spring precipitation to make the crop,” World Grain said in a report.
USDA estimates higher US supplies
The US Department of Agriculture estimated last week higher wheat supplies and ending stocks for the 2024-25 season.
“Supplies are raised on higher imports, increased 5 million bushels to 120 million, all on Hard Red Spring,” USDA said in its monthly report.
The agency estimates total wheat supply in the US at 75.87 million tons in 2024-25 compared with 75.73 million tons projected last month.
Production estimates were kept unchanged at 53.65 million tons last week.
The agency, however, raised its forecasts for ending stocks of wheat in the US to 22.17 million tons compared with 22.09 million tons estimates in October.
The USDA added:
The season-average farm price is lowered $0.10 per bushel to $5.60 on NASS prices reported to date and expectations for futures and cash prices for the remainder of the marketing year.
Rising Russian exports
Russia is one of the top exporters of wheat in the world. Rising exports from the country have been weighing on global prices.
SovEcon estimates Russian wheat exports in November at 3.7-4.1 million tons, up from 3.2 million tons a year earlier and a five-year average of 3.5 million tons.
“Dry weather persists across much of Europe, with sowing in France approaching average pace.” Sizov said.
In southern Russia, recent rainfall has improved new wheat crop prospects.
Meanwhile, easing of tensions in the Black Sea region could further pressurise prices.
Media reports have claimed that President-elect Donald Trump had phoned Russian President Vladimir Putin to resolve the conflict in Ukraine.
Though the Kremlin had denied the call.
Also, Sizov said that improved new wheat crop prospects in Ukraine may weigh on prices in the short term.
Sizov added:
Considering current global stocks and their ratio to global consumption, we view current wheat prices as fundamentally low. We also believe the market may be overestimating the prospects for Russian exports this season.
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