Market Bullets® Friday, March 21, 2025: Pre-Dawn

     The wheat market has not changed tone or rhythm for many weeks. The market is murmuring that there is little or no need to change prices to ration supplies. The only advantage to such a slow market is that it builds a reliable set of alarm tripwire prices that serve as warnings of significant movement.  

     Wheat price volatility is low, but it is intuitively strong to expect an increase in April.  For anyone using the market to manage risk, bear in mind that high volatility = more expensive options.

     Net weekly U.S. wheat sales for 2024/25 delivery were expected to range from 300,000 to 700,000 MT (11 million to 25.7 million bushels), compared to 783,416 MT the previous week. The previous week’s sales soared 83% above the average for the previous four weeks.

     Analysts are posting pre-report estimates of 2025 U.S. corn plantings at 94.3 million acres, 3.7 million above last year, and above USDA’s more recent 94.0 million. The corn/soybean ratio is running at about 2.23 corn to 1 bean, a price ratio that favors corn acres for a producer that has a choice this spring. 2.5 corn to 1 bean is near the breakeven for this ratio, which has been moving steadily downward for the last 18 months.

     The monthly International Grains Council (IGC) estimates global wheat production for 2024/25 up 2 million tonnes to 799 million (a .002% change). Ending stocks were pegged up 1 million metric tonnes to 265 (.003%). Extremely marginal changes.

     This week’s Federal Open Market Committee (FOMC) meeting made some changes to the Fed’s economic outlook, with inflation projected for this year at 2.7%, up from 2.5% posted in December, more marginal tinkering.

     The end of march is the end of the first quarter, with planting intentions and Stocks-In-All Positions reports. Without new stimuli to push money in or out, the wheat (and other) markets will be less likely to take aggressive positions ahead of the reports. Big trading funds get paid when they close out trades on a monthly and especially a quarterly schedule, so the approach of quarter and month ends may show some volume on that basis alone in the next 7 trading sessions.

     It is rarely prudent to simply hold wheat uncovered in storage, but these next few weeks may be the only time that can make some cents.

Stay tuned. Hang loose. Avoid abuse.   

Market Bullets® Thursday, March 20, 2025: Pre-Dawn 

  As of very early trade on Thursday morning, Chicago wheat futures contracts were up just 3-5 cents week-to-date. KC Hard Red Winter (HRW) had been leading based on dry conditions in the southern and southwestern plains states, but with winter storms nibbling at the edges of those regions with snow, the market has been less inclined to worry.

     Russian wheat weather is also mixed. The ability to measure weather damage to their wheat crop is still not defined enough to frighten the wheat markets.

     There are few factors with the power to lift the wheat market much more in the short run. The trendline for wheat is still defined as positive, but there are limits on how far down the price(s) could move without triggering a rush of selling. The downside remains muted because of the uncertainty of crop conditions in key production areas.

     Paris milling wheat futures were vigorously higher on Wednesday, closing up €5.00 (about 15 cents in USD per bushel). The influence of that contract on global wheat price discovery has increased dramatically in the last 3-5 years, as the influence of Russian, Ukrainian and European Union wheat export sales has increased. Chicago is still globally dominant, but Paris “Euronext” contracts have become a “must-watch” item for wheat price trend-followers.

     Gold has been striking brand-new all-time highs every day for several days. Thursday pre-dawn trade saw its peak at $3,065 per Troy ounce and then pulled back to Wednesday’s low around $3,035. The lead gold futures contract has climbed 18% since Christmas (about $469 per ounce). This is at least partly due to inflation (devaluation of the U.S. Dollar), but is also a sign of anxiety among some large entities, central banks, etc.

     For marketers of wheat, there are no solid fundamental reasons to hold large amounts of wheat in storage except the fact that any sale for future delivery should capture a healthy amount of carrying charge, since deferred prices – including new crop – are higher than nearby prices. The spread charts are consistently showing expansion of the cost storage-plus-interest going forward, a sign of a market that is not in need of nearby wheat deliveries. Call your merchant and get an update on the deferred pricing tools, costs, etc. 2025 is shaping up to be a year requiring thoughtful and deliberate marketing decision making.    

In the March 13th release of USDA’s Wheat Market Outlook Some powerful things to think about for wheat producers in the U.S.

      USDA, Economic Research Service, March 13, 2025: “Global wheat exports in 2024/25 (July–June trade year basis) are forecast at 207.3 million metric tons (MMT), down 16.8 MMT from the previous year and the lowest level in 3 years. Global trade tends to rise over time with growing consumption in parts of the world that are not self-sufficient in domestic wheat production. In the last two decades, Southeast Asia, Sub-Saharan Africa, North Africa, and the Middle East collectively accounted for about 70 percent of the growth in global wheat imports.” 

     “Total U.S. commitments (the sum of accumulated exports and outstanding sales) are 20.3 million metric tons (MMT) as of February 27, up 12 percent from the same time 4 Wheat Outlook: March 2025, WHS-25c, March 13, 2025 USDA, Economic Research Service last year. The largest year-to-year percentage increases in sales are for HRW (up 51 percent) and White (up 45 percent)”

     U.S. domestic Crop Regular Weekly Condition Reports from USDA will resume on Monday, April 7, 2025.

     Anyone watching the news about phone calls between Putin and Trump, followed immediately by airstrikes on Ukrainian infrastructure has to be skeptical about whether the Russians will negotiate “in good faith” toward realistic agreements with Ukraine. For the wheat markets this ongoing process offers little disturbance, unless there is a sudden dramatic development.  

Stay tuned, even if it is quiet.

PS – Noticeables:  <Diesel>    <Gold>     <US Dollar Index>    <Ruble VS Yuan>    <2-Yr T-Note> <Dow Jones>

Good hunting!

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