The sentiment in global grain markets has turned over the past month as we enter the final stages of the northern hemisphere production cycle.
The last major crop to be harvested is the Canadian crop, and that is now tipped to be a big one, setting a new record, after a strong finish to their season.
The Russian harvest is still under way as well, but even here we are seeing some analysts revise their production estimates up a little after several months of declining prospects.
As we get to that part of the year where not much else can go wrong with the actual growing season, commentators are working on the basis that global wheat supplies are more than adequate, despite some indication that stocks held by major exporters are not seen as increasing significantly, if at all.
There is also focus on the Australian and Argentine crops, which make up the bulk of the southern hemisphere harvest.
The crop in Argentina has had some issues but with an increased area is still expected to be larger than last year.
In Australia, ongoing rains in NSW have masked dryness creeping in elsewhere, but as we enter August, Victoria and WA have had some useful rainfall.
It is just the bulk of SA which remains at immediate risk, with rainfall for the first 10 days of August below average. While last week's rains might temporarily halt the decline in yield potential, it does not make up for the cumulative shortfall in growing season rainfall.
If the Australian season stabilises across all states, as is the suggestion from Bureau of Meteorology forecasts, it will simply add to the security of supply that the world market seems to be heading towards.
Of course, to see wheat futures move lower in August is somewhat of an older historical price pattern, with global prices not coming out of their seasonal lows until we have moved beyond the northern hemisphere harvest.
That could see the market retest the June and July lows before any price recovery.
Also, with Russia now a much more significant player than several decades ago, and with Canadian production also higher, the point at which global supply continues to increase in the seasonal production cycle has been pushed out a little. This is another reason why we might expect weakness in prices in August ahead of those two harvests being complete.
What we would hope to see from September onwards, is the addition of storage costs to global wheat prices, giving us a natural lift in the market as our own harvest approaches. The willingness or otherwise of farmers globally to sell will also help determine price direction into the end of the year.
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