Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Wheat Dips As Market Imbalance Expected in 2019

January 24, 2019 at 15:11 by Andrew Moran

Wheat futures are trading lower as the latest developments in the global wheat market suggest that an industry imbalance is brewing this year. With many agricultural commodities coming under pressure over the last 12 months, wheat has been performing modestly well, climbing 4.5% so far this year. The demand is there, but will supply fail to keep up?

March wheat futures dipped $0.05, or 0.1%, to $5.255 per bushel at 13:36 GMT on Thursday on the Chicago Board of Trade (CBoT). Wheat prices, which are poised for a weekly gain of more than 1%, are trading at their best levels since December 19.

For years, wheat has been considered a stagnant market with supply and demand levels pretty much in sink. But that may change this year as the global wheat market is set to experience a few new developments, and, whether they are a boon or a hindrance to wheat futures, remain to be seen.

So far this year, demand is up, with many markets increasing their purchases.

On Thursday, Japan, which is the world’s sixth-biggest wheat consumer, is importing a total of 102,057 tonnes of food-quality wheat from the US, Canada, and Australia. According to the Ministry of Agriculture, the shipments are scheduled for between February 21 and March 31.

China is reportedly buying seven million tonnes of wheat from the US as part of the 90-day trade truce agreed upon in December. Indonesia announced it is ramping up its wheat imports from Australia by 30,000 tonnes. Bangladesh and Algeria are importing as much as 50,000 tonnes of the agricultural commodity this year.

This is good news for major wheat-producing countries. Over the last four years, prices have barely topped $6 a bushel, creating the sentiment that the wheat industry is a dry one for investors. Something happened in 2018: Australia, Canada, and Russia, the biggest exporters, reduced their output levels and overall supplies. This trend is continuing in the early part of 2019.

And such a move could create an imbalance in the coming months, raising the price of wheat. This could finally allow wheat growers to catch up.

In other agricultural markets, March corn futures slipped $0.02, or 0.53%, to $3.7675 per pound. March soybean futures fell $0.0175, or 0.19%, to $9.1325 a bushel. March orange juice futures shed $0.005, or 0.34%, to $1.1175 per pound.

Leave a Reply