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Wheat prices - will they kick their losing habit in 2015?

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Wheat futures fell in 2014 for a second successive year, weighed by the strong world grain production result which hit prices of the likes of corn too.

Still, the decline was limited in the end to 2.6% in the Chicago contract, the world benchmark, which ended 26% above the five-year low reached in late September, in a recovery fuelled by concerns over Russia – both in terms of export curbs and a poor start for autumn-sown seedlings.

In fact, Chicago wheat, the world benchmark, fared better than its Paris peer, which dropped 4.3%, despite a fall of 12% in the euro against the dollar, improving the competitiveness of eurozone imports.

(London feed wheat, meanwhile, dropped 19%, despite a 6% drop in sterling, although the extent of the decline in futures reflects the UK's return to being a net exporter – meaning domestic supplies need to price themselves to go.)

Will wheat futures in 2015 continue to find support from Russia fears? Or will ample world grain supplies foster further price declines?


"The days of the highest perceived availability should already be behind us. Since the summer, the US Department of Agriculture has reduced its forecasts for Australia's 2014-15 wheat harvest by 2m tonnes to 24m tonnes.

Commerzbank wheat price forecasts, 2015

Q1: $5.80 a bushel

Q2: $5.90 a bushel

Q3: $6.00 a bushel

Q4: $6.10 a bushel

Prices: quarter average, front Chicago futures contract

"According to the USDA, after a slight reduction, still 58% of wheat plants in the US are in good or excellent condition, but the recent early cold spell harbours further risks. In Russia and Ukraine, the drought and the cold are affecting the wheat plants.

"Wheat production in the EU should also decline. Though the acreage should be about as large as in the previous year, we cannot expect the very high yields seen overall to be repeated even though sowing conditions were predominantly favourable, according to the EU commission.

"Globally, we therefore cannot automatically expect another surplus. Even though scarcity is not on the cards, some tightness seems likely after the positive surprises of the last two years."

Gulke Group

"Wheat is either in a pause that refreshes or has topped.

"January 12 sees the first USDA estimate of winter wheat acreage.

"If, during recent travels, not seeing a green field from Chicago to Normal, Illinois to Cedar Rapids to Fargo and Minot, North Dakota is any indication, I have to conclude that soft and hard winter wheat acres will be down 1m acres or more the January, report leaving hard-red spring wheat in the northern Plains and Canada to respond with higher acres should the market realise it needs them.

"Certainly the poor quality Canadian and French wheat and Russian/Ukraine uncertainty bears out the fundamental rationale for the short and longer term technical buy signals three months ago."

Morgan Stanley

"Declining global feed demand and adequate global supply should pressure wheat prices in 2014-15. Array

2014-15: $5.40 a bushel

2015-16: $5.50 a bushel

Prices: season average, front Chicago futures contract

"Although they have not had material impacts so far, weather risks outside the US may pose threats to global production."


"With only incremental increases to global wheat demand through 2014-15 and no significant demand-side shocks expected, prices will remain driven by the supply side.

Rabobank wheat price forecasts, 2015

Q1: $5.20 a bushel

Q2: $5.30 a bushel

Q3: $5.50 a bushel

Q4: $5.60 a bushel

Prices: quarter average, front Chicago futures contract

"Global consumption will increase by 21m tonnes, as competitively-priced feed wheat will stimulate demand while limiting price downside during 2015.

"With the market having already incorporated most bearish factors into wheat prices, downward price movements will be limited by opportunistic buying."

Societe Generale

"Based on the current export pace, we are lower than the USDA on our 2014-15 US export forecast, adding to the bearish slant.

SocGen wheat price forecasts, 2015

Q1: $5.14 a bushel

Q2: $5.40 a bushel

Q3: $5.65 a bushel

Q4: $5.63 a bushel

Prices: quarter average, front Chicago futures contract

"As of writing, US-origin is well above both EU- and Black Sea-origin wheat on a delivered basis.

University of Illinois

"The most important price factor moving forward will be the size of the wheat crops outside the US

"The early season focus was on Russia due to ongoing dry conditions that began in July 2014 and seemed to halt the decline in wheat prices.

"Smaller crops in that part of the world would allow for some rebound in US wheat exports.

"With most of the Illinois wheat crop sold at or shortly after harvest, the average price received for the 2014 crop will be near $5.00 a bushel. An average near $5.50 is expected at harvest time in 2015."


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