It’s been a wild week in the wheat markets, with lots of trading action and news stories driving the markets.
Chaos, says Jon Driedger of Leftfield Commodities Research, is one way to describe it — starting off with last week’s United States Department of Agriculture report.
“That was a friendly report for wheat. We go into the weekend, and you get the announcement from India that they’re going to stop exports, maybe they’re going to export some…the whole thing has been a little convoluted,” he explains.
When you look at the temperatures India has had, followed by a shrinking crop, on one hand, this news doesn’t really come as surprising. On the other hand, says Drieger, “it seems like maybe there was some headline chasing and money flow.” (Story continues below interview)
One of the things we need to remember, he highlights, is that in the grand scheme of things, the India wheat market is quite small.
“It’s a pretty small market from a financial market perspective, relative to corn and beans. It doesn’t take that much money to maybe cause exaggerated swings. And so you sort of have this element of maybe chasing that headline. And then of course, we’ve got financial markets — crude oil, everything else breaking. But it’s just tremendous volatility…it really is a market that, boy, we’re extremely elevated levels,” he explains.
In all directions, it’s the fragility of the market that has many observing closely. There’s no question how tight this global market is, says Driedger, and when you look at all the production threats, it could get worse over the next weeks or few months.
Jim Wiesemeyer of Pro Farmer also recently joined RealAg Radio to discuss India and the wheat markets. As Weisemeyer explains, India closed off exports so they could get a true assessment of their new crop potential.
“Once they get a better read on that, I fully expect the Indian government to announce that they’re resurrecting wheat exports. Now to what degree — it’s murky. But I would look for that in the not too distant future.”