Grain Market Challenges

By James Urquhart
11^th March, 2025

It is said ‘a week is a long time in politics’ but when politics and grain markets collide, a week can feel like an eternity. Like many industries around the globe, grains and oilseed supply chains have spent recent days trying to digest the ramifications of proposed US tariffs and the subsequent retaliatory responses from global trading partners. 

Aside from the metaphorical clouds of trade barriers and the physical clouds of Cyclone Alfred, the market is also starting to turn its attention to the absence of clouds in the Northern Hemisphere as those crops come out of dormancy. In the US, the Hard Red Winter (HRW) growing regions require moisture. Likewise, Russia is also looking for rain and more specifically in the south where the higher yielding crops are grown. The March forecast for both these important grain producing regions is for below average rainfall which will be felt more in Russia where that crop was sown dry and went into dormancy with limited moisture. As such, local forecasters are suggesting a production estimate of circa 80 million tonnes, far from the low 90's that we have become accustomed to at this time of year. 

Grower selling will remain a key influence on grain markets, both here and abroad. Locally, the extended free warehousing available and more palatable markets for non-cereal crops has meant that the grower continues to be historically sluggish on their wheat marketing. With that, Aussie wheat is finding itself displaced from its traditional export markets and so any significant increase to the sales-pace from growers, could be met with disengagement from the trade.
In Russia, grower selling has also stagnated as prices on offer to growers continue to languish under the influence of an appreciating currency and deteriorating export numbers due to the implementation of export quotas. 

Outside of the tariff-related trade spats and northern hemisphere weather, the next market input will be this week’s USDA update to the World Agricultural Supply and Demand Estimate (WASDE) which will provide the market an update based on the assumption that current trade policies remain in place.

Keeping abreast of the social media posts out of Washington whilst calculating the potential impacts to global trade flows would leave anyone perplexed but throw in an out-of-bounds category two cyclone and the start to another footy season and it’s been a big week here in Australia.