The US Government forecaster (USDA) released their May report earlier in the week and it contained some serious changes. The USDA reduced the yields for Hard Red winter wheat below last year and reduced harvested acreage, confirming the US plains drought has been severe.
How does this impact Tasmania prices?
The reduction in US production means that the US has very little wheat to export over the next 12 months. It means that Australia will continue to be a preferred origin of wheat, with the only competition coming from Russia and there is a lot of uncertainly still around the supply of grain from Russia.
At the time of writing, talks continue between the UN, Ukraine, and Russia in regard to the grain corridor. So far, the market has been assuming that shipments will continue with or without a deal on the grain corridor, for many this assumption is starting to look like a big risk.
The USDA also forecast record corn and soybean yields for the upcoming harvest. While the crops are off to a great start, we still have a whole growing season ahead of us.
For those farmers that have planted canola this year, keep a close watch on the weather forecasts for Canadian Prairies. It is off to another dry start, still early days but prices have factored-in a rebound in production.