Wheat producers and marketers have recently been on a wild ride.
And they’d better buckle up…’cause it ain’t over yet.
Refresher: CBOT wheat prices steadily climbed over the course of the fall (with a few dips). A major rally then shot prices into the stratosphere just prior to Thanksgiving.
Then, the grizzly bear showed up and devoured much of that bullish trend.
Yet that price rally was kind of expected. Winter wheat planting season did not have a great start, 2021 spring wheat from the U.S./Canada was dismal (where was that rain, Mother Nature?), and Australia’s suspected bumper crop was doused right at harvest.
The plunge: Rising prices then curbed demand. Plus, in the December WASDE report, the USDA basically said, “Uh…it looks like global/domestic reserves and international output for 2021/2022 will all be higher than expected.” The result? Prices tanked.
But wait…there’s more. Enter the Russian yo-yo.
Back in the USSR: Russia can’t make up its mind regarding just how stingy it wants to be. In an effort to stave off food inflation, the Ministry of Agriculture has limited export quotas and imposed taxes on wheat exports.
Where this goes: Wheat prices might still have a little way to drop, but with relatively tight global supplies and a high consumption-to-production ratio expected, producers and marketers should expect to eventually grab the bull by the horns.