Growth in Russian wheat production starting to slow

Although the wheat market is often considered a stagnant one, it is in fact growing, says Marlene Boersch, owner of Mercantile Consulting Ventures. The market only seems stagnant because supplies have been growing as fast as demand.  This may be changing, however, as Russia’s — one of  the world’s largest wheat exporters — upward trend in production may have stalled.

Boersch says wheat supply has experienced a couple of hiccups this year, which is good news for Canada . “The feature of this year’s wheat market was that some of the major exporters actually had reduced supply. And most notably Russia’s steep upward trend has been interrupted. They had a reduced crop this year. The same is true for Australia which matters (for movement) into Asia.”

Demand is up a bit this year, which, according to Boersch is line with the trend. This combined with the supply hiccups have allowed for some new opportunities. “We have seen very good demand from Indonesia for example. That’s our single biggest buyer right now.”

Boersch has some pricing advice for old crop. “What we have seen all year is that deferred prices actually were rewarded.” She continues, “That is still there. There have been some specials recently for February/March significantly over the $7 levels.”

New crop pricing opportunities should be more clear by now, Boersch says, but geo-politics is muddying the waters. For instance, because of trade disputes, soybean acres should be settled but are still up in the air and this has a direct impact on wheat acres. Boersch suggests with all this taken into account, that if you can price new crop at significantly over $7 you might want to grab it.

Listen to the entire interview with Marlene Boersch of Mercantile Consulting Ventures, below.

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