Chicago Board of Trade wheat futures ended last week near unchanged in Australian dollar terms to hold on to the gains made over the previous month.
The United States Department of Agriculture updated its World Agricultural Supply and Demand Estimates early last week.
Global wheat production was increased by 4.32 million tonnes from the August estimate to 783.92mt. This was mainly due to Russian production increasing to a new record size crop.
Demand also increased by 2.42mt from August to 791.02mt. The world is expected to consume more wheat than it will produce for the second year in a row.
The war-torn Black Sea region remains a focal point of global grain markets.
The market is trying to price in any comments about the ability of the region to export grain, whether by the Ukraine grain corridor or Russia directly.
It's reported that wheat prices to Russian farmers have been improving recently despite the record large crop being harvested.
This may be signalling that traders are covering export sales or an expected improvement in grain exports flowing from Russia, which have been underwhelming so far.
The USDA expects Russia to export 42mt of wheat. The current export volumes will need to increase significantly for that to be achieved.
On the global demand side, Saudi Arabia announced a tender over the weekend. The market expects pricing to be based off Russian prices plus cost of execution to the importer.
Hence the Russian crop and resulting prices are likely setting the global price for other exporters to work from, particularly into importing nations of North Africa and the Middle East.
This isn't unusual for this time of year but given the war and potential unpredictable nature of grain flowing out of the area, it remains one for the market to watch intently.
In Australia, prices generally improved last week as buyer engagement increased.
There were 30 buyer businesses that bought 25 grades of wheat, barley, canola, sorghum, oats, lupins, chickpeas and faba beans through Clear Grain Exchange with more searching for grain offered for sale.
APW1 wheat traded $416/t Pt Kembla, $405/t Melbourne and $400/t Kwinana. ASW1 traded $374/t Melbourne and $371/t Albany.
Higher protein wheat grades continue to attract premiums with H1 and H2 in Kwinana trading $500/t and $450/t respectively, H2 also traded $439/t Pt Kembla, $433/t Newcastle and $436/t Melbourne.
Stock feed wheat was trading $388/t Pt Adelaide, $364/t Newcastle and $354/t Portland as examples.
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