Weekly Agri- Commodities Recap: 02-06/09/24

The grain market began the week with relatively muted activity. MATIF wheat traded within a narrow range and closed unchanged due to low trading volumes, partially influenced by the U.S. holiday. Analysts reported stable Russian wheat prices at $216 per ton (FOB) for mid-September shipments. Meanwhile, Australia’s ABARES revised its wheat production forecast for 2024/25 up to 31.8 million metric tons (mmt), a significant 23% increase from the previous year, while Kazakhstan reported a strong harvest of 6.4 mmt of grain from a quarter of its planted area. USDA estimates suggest potential upward revisions for both countries in the next report.

Tuesday saw renewed energy in CBOT prices, driven by fund short-covering as U.S. stocks and oil fell. U.S. corn ratings held steady at 65% good/excellent, while soybean ratings declined by 2 percentage points, possibly offering price support for soybeans. U.S. wheat exports totaled 578k tons, outperforming expectations, while Jordan secured 60k tons of feed barley and issued a tender for an additional 120k tons of wheat for January-February 2025 delivery.

Wheat was the standout performer mid-week, extending its winning streak with notable gains at both CBOT and Kansas exchanges. Prices broke key technical resistance levels, with non-commercial traders covering short positions. The MATIF milling wheat market also saw some short covering, though to a lesser extent. While oil prices dropped below $70 per barrel on weak demand concerns, particularly from China, U.S. wheat exports remained robust, supporting further market gains.

Thursday marked the end of wheat's rally, as futures gave up some ground. Russian wheat prices remained unaffected by recent market moves, creating a growing disparity with global futures markets. Traders began positioning ahead of the upcoming USDA report. Meanwhile, drought concerns in the U.S. persist, with 52% of winter wheat areas affected, up 5 percentage points from the previous week.

The week ended on a quieter note, with December MATIF wheat closing slightly higher, though grain and oilseed markets faced broader declines of 1-2%, pressured by a strengthening dollar. The UN FAO trimmed its 2024 global cereal production forecast by 2.8 mmt but raised its wheat output estimate to 791.4 mmt, an increase of nearly 3 mmt year-over-year. In the U.S., weekly export sales were strong for corn and soybeans but underwhelming for wheat. Speculative funds continued reducing net short positions across major commodities, though corn and soybean positions remain significantly below the 5-year range.