There seems to be little doubt Russian wheat prices are rising.
Most weeks we read reports suggesting prices have risen another dollar or two, and most new export tenders they win into key consumptive markets, seem to be at slightly high levels each time.
With the price increases come stories of wheat supplies tightening, forcing up the Russian domestic market. That then fuels another round of speculation of the government having to step in and curtail Russian wheat exports.
The other news on the demand front is that China may have bought as much as two to three million tonnes of Hard Red Winter wheat from the US.
Such stories are hard to confirm because of the government shutdown, but there does seem to be some truth behind an increase in demand for higher quality wheat from China.
Normally Australia participates in this trade, but with our own supplies tighter, it has been reported that Canada has been making additional sales this year, and now possibly the US.
The China story is interesting on two fronts. Firstly, they are regular importers of higher quality wheat, and this year they seem to have to cast the net further afield. Secondly, are we seeing a lift in Chinese demand above recent ‘normal’ levels?
If China is lilting its imports, it will signal a new source of demand for wheat in the global market. In the past when China has increased its imports, it has been supportive of global prices because of its additional pressure on supplies.
This year any lift in demand into China will coincide with tighter global stocks, and importantly will see stocks outside of China come under a little more pressure.
If any increase in demand from China flows over to the US, it will help support the long awaited lift in US wheat exports forecast for the second half of the 2018/19 marketing year.
In the Australian grain market, the summer heat has pulled down potential sorghum production in the northern cropping regions, while an uplift in demand for feed across drought ravaged areas draws closer.
There are parts of SA where water supplies are as tight as they have ever been, and where paddock feed post harvest is running out. Some of these regions have been key suppliers of fodder for eastern drought regions, but are now becoming a significant part of the feed demand equation themselves.
It remains a patience game for all grain growers, whether they are dealing with unsold grain from last harvest or looking forward to what might be achieved for the new season.
