The world needs wheat; the world is getting less wheat.
I don’t want to sound like a broken record, but this market is volatile (see here). The invasion of Ukraine has started this, but the fundamentals have kept it going.
The weather in many of the world’s major producers is not conducive to bridging the supply gap left behind by the loss of Ukrainian volumes. India is down (see here), America is in a sorry state (see here), and China is in strife (see here).
France was looking good, but it is starting to turn. FranceAgriMer has a similar condition report to the USDA. This provides an outline of the percentage of the crop in different states. The most important is generally the percentage that is good / very good or, in this case, bonnes/ très bonnes.
The conditions have been really good over the past few months. Last week, however, the conditions dropped signifancantly (-7%). This is one of the largest drops between reports in recent times.
The second chart shows the comparison to the same weeks since 2012. The crop still holds a solid bonnes/ tres bonnes rating. It is important to note that weather forecasts are not particularly affectionate at present, with drier than typical weather set to hit. A further drop next week is expected by most.
This puts another major wheat producer at risk of deteriorating crop conditions. What does this mean for Australian farmers? We have an enviable position of having good prospects, with a dwindling supply from the major producers. This is positive for price.
As I said in many articles, any issues in the northern hemisphere would make the market crazy. We are now facing multiple.