What’s Driving Price Discovery In The Wheat Markets?
03/08/2023
- US protein stocks are low. Following the MY 22/23 drought, US stocks of high protein wheat (HRW + HRS) are low which can support old crop cash prices.
- Planted US winter wheat acres are materially higher. HRW planted acres are +10% YoY. SRW acres are +20% YoY. Large acreage increases and the possibility of a larger crop can pressure prices in MY 23/24.
- HRW production: “Beware the ides of March”. Acute dryness impacted the MY 23/24 crop during planting. The lingering drought remains intact inside key producing states.
- US wheats are uncompetitive in the global market. A strong US dollar combined with tight US stocks, and robust global supplies has made US wheat uncompetitive against Australian, Canadian, EU, German, Romanian Russian, and Ukraine milling wheats.
- As corn supplies are forecast to expand which limits wheat feeding. This will incrementally lower domestic use.
- It is unlikely that Russia will not repeat a record wheat harvest and export program. This can help US the regain incremental market share in select export destinations.