Domestic wheat is falling worryingly, especially after the wheat price fell below 1.3 yuan/catty, the market seems to have lost its backbone, and the new wheat harvest is getting closer and closer, and the market is becoming more and more nervous.
And just when the domestic wheat market was in shock, there was "big news" in the international market.
Just last week, international wheat generally ushered in a sustained rise, with Chicago wheat rising 9.79% during the week, the highest increase since the Russia-Ukraine conflict.
As we all know, since the outbreak of the Russia-Ukraine conflict, international wheat prices have soared instantly, but with the market's digestion of the conflict and the gradual decline of sentiment, coupled with the Fed's crazy interest rate hikes, wheat prices have begun to pull back across the board.
By the end of the year, it had fallen to a low point.
It's good, why did it suddenly go up again?
This also makes people wonder if the direction of the market is about to change again?
Careful analysis shows that there are two main reasons for the rise in international wheat prices:
The first is extreme weather.
Extreme weather can be said to have never been offline, and it has been one of the important factors disrupting the global food market in the past two years.
Recently, the drought in the United States and Russia has intensified, and the wheat yield rate has been declining, and the wheat production forecast has also been revised downward.
As a result, the market is concerned that a decline in production in the two major wheat producing countries could affect wheat production in the northern hemisphere.
So under this worry, the bullish sentiment began to rise.
At the same time, we also note that Russia, as the world's largest wheat exporter, has been in the limelight in the past two years, but the weather in the southern region, which is the largest wheat producing area in Russia, continues to be dry, which makes the crop growth worse, so that Russia's new wheat output has also been revised downward, from the previous forecast of 94 million tons to 93 million tons, and this is the first time that the forecast for Russian wheat has been lowered this year.
As a result, Russian wheat prices have risen recently, from less than $200/mt to $210/mt.
Also affected is Europe, where major wheat producers, led by France, have also lowered their production forecasts, which has also led to an increase in European wheat prices.
There is also Argentina in South America, where El Niño is forecast to end by the middle of this year, but La Niña is likely to make a comeback.
As a result, Argentine farmers are significantly less willing to plant wheat, and some farmers intend to abandon wheat in favor of corn and soybeans, which has led to a downward revision of the Argentine wheat acreage, which is roughly the same as last year, but still below the average of the past five years.
The second reason is that India's wheat stocks have fallen to a new low.
Why just bring India out?
Although India is also a large wheat producer, Indian wheat exports account for a small proportion of the global wheat market, but the impact is large.
For example, when the Russia-Ukraine conflict broke out, global wheat prices soared, and India once shouted the slogan of expanding wheat exports to feed the world, so global wheat prices temporarily eased.
But before the breath could be smoothed, India's wheat export ban once again pushed wheat to the peak.
So what happened this time?
Due to the failure of India's wheat harvest for two consecutive years, the domestic wheat supply has dropped significantly, and the government has no choice but to continue to release wheat from the national reserve in order to stabilize the domestic wheat price.
As a result, India's wheat stocks have been declining, with the latest estimate falling to 7.5 million tonnes, not only below last year, but also well below the average of the last decade, and even the lowest in 16 years.
Not only that, but according to the U.S. Agricultural Counselor, India may not only not be able to export wheat, but may even need to import wheat to fill its domestic stocks.
As a result, under the influence of these factors, international wheat has risen.
Does that mean that the wind in the international wheat market is about to change?
Although at present, there are many influencing factors, but they are not yet climate.
Although the forecast for global wheat production has been revised downward, it is still 1.1 percent higher than the previous year, which is still the second highest level in history, which means that the wheat deficit is not significant.
At present, it is mainly about the weather hype.
On the other hand, the impact at home is even more limited.
If there is no extreme weather in the country, the probability of a bumper wheat harvest is higher, which means that the supply will continue to increase, which will make the already weak wheat even worse.
However, the mentality of the wheat market has also changed significantly recently, the volume of investment and auction has been reduced, and the new wheat is about to be listed, the advantages of old wheat have gradually emerged, and the market price reduction mentality has also converged.
As a result, the wheat market gradually stabilized.
What about wheat in May?
Again, it is the biggest variable that stops at the weather.
At the end of this article, thank you for reading!