International wheat futures remain volatile during the northern hemisphere spring

Nearby Chicago Board of Trade wheat contracts traded a range of just over 50 USc/bu in the past week. Kansas City Board of Trade wheat contracts similarly traded a range of 60 USc/bu.

It is not unusual for volatility in prices to occur through this period as the market tries to work out how much grain will be produced and available for the coming year.

This year the potential for volatility is heightened by the backdrop of relatively tight global wheat stocks and the projection that this will remain the case into 2023/24.

This means the market is closely watching weather forecasts that can impact supply and reacting to it. Bad weather forecast and the market goes up, good weather forecast and the market goes down.

In conjunction with this, the market continues to watch other factors that could impact supply or demand such as the Ukraine war and crop conditions of other substitute crops such as corn.

Last week CBOT wheat futures fell to start the week on the back of a slightly improved US winter wheat crop condition rating (which remains overall poor) and some rain forecast for US corn areas.

By the end of the week some forecast weather models had turned drier again and conflict in the Ukraine war had escalated which saw futures regain their earlier losses.

Reports Russia is blocking the registration of ships into all Ukrainian ports this past week is keeping uncertainty over supply from the region.

There are also reports the Chinese crop may not be as large as the United States Department of Agriculture is expecting.

Another impact on price was the Australian dollar increased nearly 1 USc through the week.

This was partly on the back of the Biden administration signing off to increase the US debt ceiling to an eye-watering $US31.4 trillion.

The news somehow gave economic markets a positive end to the week by effectively kicking the problem down the road.

A 1 USc move higher in the value of the Australian dollar equates to the Australian wheat price dropping by about A$5 a tonne at current levels.

In Australian markets grain buyers remain active in trying to secure grain, however struggled to maintain the lift in prices from the week before.

Growers also appear relatively comfortable holding their target prices at slightly better values than those recently traded.