Because wheat is widely sourced around the world, changes in a single country’s supply mainly affect just local prices. Instead, what tends to drive globally important wheat futures contracts, and thus cash prices, are significant shifts in available supply from the major exporters collectively.
Wheat futures contracts traded on the Chicago Board of Trade (CBOT) have the highest volume in the world and therefore are a proxy for global wheat prices. Although the specifications of the contract are for delivery of #2 soft red winter wheat (SRW) to eligible locations in the United States, the delivery mechanism isn’t the primary use of the contract. Instead, the contract is generally used to hedge cash trading and speculate on the direction of prices by market participants around the globe. Therefore, market participants focus on production in each of the major exporting countries and especially on the available supply of multiple types of wheat from the major origins collectively.
Of the major origins, no single country has more than 20% market share of world exports. As a result, changes in supply prospects from a single origin will affect local prices, which is reflected in free on board (FOB) export price data provided by the International Grains Council (IGC). This data, which can be found in Gro, allows users to compare FOB export prices from a wide range of origins, such as Rouen, France, versus the Gulf of Mexico. Since a poor crop in one origin country might be offset by good crops elsewhere, markets tend to react to significant shifts in available supply for the major exporters collectively.
Seasonality is another key component to understanding what drives wheat prices. In a typical trend, FOB prices from Argentina were higher than those of other producers while its crop was growing in June through October. But once it was harvested, Argentina became the cheapest among various origins, including the US, Black Sea, and Europe.
Given that the combined supply from major origins is the key driver of futures price, understanding which countries are in their growing period is essential. Crop Calendars from the University of Wisconsin-Madison’s Center for Sustainability and the Global Environment, or SAGE, is a very useful tool on the Gro platform. Northern Hemisphere winter wheat crops are the next area of focus, as they come out of their dormancy stage in March. After that, spring wheat crops in the US, Canada, and Russia are primarily planted in May. The large Southern Hemisphere producers, Argentina and Australia, plant while the spring crops in the North are growing. And the cycle is completed with the Southern crops growing while the Northern winter crops are planted.
During periods when none of the large wheat crops are growing, like the last few months, trade flow dynamics can be the primary price driver of wheat futures. CBOT prices have rallied more than 20% since early September. Several importing countries, such as Egypt, Turkey, and Algeria issued tenders to purchase supplies in the last two months. At the same time Russia's export flow has been slower than the previous year. September to November 2019 exports were down 14% compared to the same period in 2018. Russian farmers are reportedly holding back supply, partly due to a 9% rally in the ruble against the US dollar from early September to mid-January. Currency moves have a direct correlation to cash export prices as exports are paid in US dollars and the farmers receive local currencies.
Better than expected demand and reduced supply from Russia, the largest exporter, pushed prices higher over the last few months. The ruble has declined from the recent high in early January so that may encourage some additional exports. But, prospects for the new Northern Hemisphere winter wheat crops will become the focus of the market in about a month.
A related Insight, discussing Gro’s yield forecasting models for major wheat producing countries can be found here.
What Information Do We Collect?
The information we gather enables us to personalize, improve and continue to operate the Services. We collect the following types of information from our users.
IP Address Information and Other Information Collected Automatically:
· We automatically receive and record information from your web browser when you interact with the Services, including your IP address and cookie information. This information is used for fighting spam/malware and also to facilitate collection of data concerning your interaction with the Services (e.g., what links you have clicked on).
· Generally, the Services automatically collect usage information, such as the number and frequency of visitors to the Site. We may use this data in aggregate form, that is, as a statistical measure, but not in a manner that would identify you personally. This type of aggregate data enables us and third parties authorized by us to figure out how often individuals use parts of the Services so that we can analyze and improve them.
Information Collected Using Cookies:
· Most browsers have an option for turning off the cookie feature, which will prevent your browser from accepting new cookies, as well as (depending on the sophistication of your browser software) allowing you to decide on acceptance of each new cookie in a variety of ways.
We collect statistical information about how users collectively use the Services (“Aggregate Information”). Some of this information may be derived from Personal Information. This statistical information is not Personal Information and cannot be tied back to you or your web browser.
How, and With Whom, Is My Information Shared?
IP Address Information:
Information You Elect to Share:
We share Aggregate Information with our partners, service providers and other persons with whom we conduct business. We share this type of statistical data so that our partners can understand how and how often people use our Services and their services or websites, which facilitates improving both their services and how our Services interface with them. In addition, these third parties may share with us non-private, aggregated or otherwise non Personal Information about you that they have independently developed or acquired.
Information Shared with Our Agents:
We employ and contract with people and other entities that perform certain tasks on our behalf and who are under our control (our “Agents”). We may need to share Personal Information with our Agents in order to provide products or services to you. Unless we tell you differently, our Agents do not have any right to use Personal Information or other information we share with them beyond what is necessary to assist us. You hereby consent to our sharing of Personal Information with our Agents.
Information Disclosed Pursuant to Business Transfers:
In some cases, we may choose to buy or sell assets. In these types of transactions, user information is typically one of the transferred business assets. Moreover, if we, or substantially all of our assets, were acquired, or if we go out of business or enter bankruptcy, user information would be one of the assets that is transferred or acquired by a third party. You acknowledge that such transfers may occur, and that any acquirer of us or our assets may continue to use your Personal Information as set forth in this policy.
Information Disclosed for Our Protection and the Protection of Others:
Information We Share With Your Consent:
Except as set forth above, you will be notified when your Personal Information may be shared with third parties, and will be able to prevent the sharing of this information.
Is Information About Me Secure?
We store all of our information, including your IP address information, using industry-standard techniques. We do not guarantee or warrant that such techniques will prevent unauthorized access to information about you that we store, Personal Information or otherwise.
What Information of Mine Can I Access?
You can access and delete cookies through your web browser settings.
California Privacy Rights: Under California Civil Code sections 1798.83-1798.84, California residents are entitled to ask us for a notice identifying the categories of personal customer information which we share with our affiliates and/or third parties for marketing purposes, and providing contact information for such affiliates and/or third parties. If you are a California resident and would like a copy of this notice, please submit a written request to the following address: 1156 6th Ave, 7th Floor, New York, NY 10036
What If I Have Questions or Concerns?
If you have any questions or concerns regarding privacy using the Services, please send us a detailed message to firstname.lastname@example.org. We will make every effort to resolve your concerns.
Effective Date: March 11, 2014
b. You shall not (directly or indirectly):i. take any action that imposes or may impose (as determined by us in our sole discretion) an unreasonable or disproportionately large load on our (or our third party providers’) infrastructure;ii. interfere or attempt to interfere with the proper working of the Services or any activities conducted on the Services;iii. bypass, circumvent or attempt to bypass or circumvent any measures we may use to prevent or restrict access to the Services (or other accounts, computer systems or networks connected to the Services);iv. use manual or automated software, devices, or other processes to “crawl” or “spider” any page of the Site;
v. harvest or scrape any Content from the Services;
vi. otherwise take any action in violation of our guidelines and policies;vii. decipher, decompile, disassemble, reverse engineer or otherwise attempt to derive any source code or underlying ideas or algorithms of any part of the Services (including without limitation any application), except to the limited extent applicable laws specifically prohibit such restriction;viii. modify, translate, or otherwise create derivative works of any part of the Services; orix. copy, rent, lease, distribute, or otherwise transfer any of the rights that you receive hereunder.c. We also reserve the right to access, read, preserve, and disclose any information as we reasonably believe is necessary to:i. satisfy any applicable law, regulation, legal process or governmental request;ii. enforce these Terms of Service, including investigation of potential violations hereof;
iii. detect, prevent, or otherwise address fraud, security or technical issues;
iv. respond to user support requests; or
v. protect the rights, property or safety of us, our users and the public.4. Third Party Services. The Services may permit you to link to other websites, services or resources on the Internet, and other websites, services or resources may contain links to the Services. When you access third party resources on the Internet, you do so at your own risk. These other resources are not under our control, and you acknowledge that we are not responsible or liable for the content, functions, accuracy, legality, appropriateness or any other aspect of such websites or resources. The inclusion of any such link does not imply our endorsement or any association between us and their operators. You further acknowledge and agree that we shall not be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any such content, goods or services available on or through any such website or resource.5. Termination. We may terminate your access to all or any part of the Services at any time, with or without cause, with or without notice, effective immediately. All provisions of these Terms of Service which by their nature should survive termination shall survive termination, including, without limitation, ownership provisions, warranty disclaimers, indemnity and limitations of liability.6. Warranty Disclaimer.a. You release us from all liability for you having acquired or not acquired Content through the Services. We make no representations concerning any Content contained in or accessed through the Services, and we will not be responsible or liable for the accuracy, copyright compliance, or legality of material or Content contained in or accessed through the Services.b. THE SERVICES AND CONTENT ARE PROVIDED “AS IS”, “AS AVAILABLE” AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ANY WARRANTIES IMPLIED BY ANY COURSE OF PERFORMANCE OR USAGE OF TRADE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. WE, AND OUR DIRECTORS, EMPLOYEES, AGENTS, SUPPLIERS, PARTNERS AND CONTENT PROVIDERS DO NOT WARRANT THAT: (I) THE SERVICES WILL BE SECURE OR AVAILABLE AT ANY PARTICULAR TIME OR LOCATION; (II) ANY DEFECTS OR ERRORS WILL BE CORRECTED; (III) ANY CONTENT AVAILABLE AT OR THROUGH THE SERVICES IS FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS; OR (IV) THE RESULTS OF USING THE SERVICES WILL MEET YOUR REQUIREMENTS.7. Limitation of Liability. IN NO EVENT SHALL WE, NOR OUR DIRECTORS, EMPLOYEES, AGENTS, PARTNERS, SUPPLIERS OR CONTENT PROVIDERS, BE LIABLE UNDER CONTRACT, TORT, STRICT LIABILITY, NEGLIGENCE OR ANY OTHER LEGAL OR EQUITABLE THEORY WITH RESPECT TO THE SERVICES FOR ANY (I) LOST PROFITS, DATA LOSS, COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, COMPENSATORY OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER, SUBSTITUTE GOODS OR SERVICES (HOWEVER ARISING), (II) BUGS, VIRUSES, TROJAN HORSES, OR THE LIKE (REGARDLESS OF THE SOURCE OF ORIGINATION), OR (III) DIRECT DAMAGES IN EXCESS OF $50.00.8. Governing Law and Jurisdiction. These Terms of Service shall be governed by and construed in accordance with the laws of the State of New York, including its conflicts of law rules, and the United States of America. You agree that any dispute arising from or relating to the subject matter of these Terms of Service shall be governed by the exclusive jurisdiction and venue of the state and Federal courts of New York County, New York.9. Miscellaneous.a. Modification. We reserve the right, in our sole discretion, to modify or replace any of these Terms of Service, or change, suspend, or discontinue the Services at any time. Your continued use of the Services following notification of any changes to these Terms of Service constitutes acceptance of those changes.b. Entire Agreement and Severability. These Terms of Service are the entire agreement between you and us with respect to the Services, including use of the Site, and supersede all prior or contemporaneous communications and proposals (whether oral, written or electronic) between you and us with respect to the Services. If any provision of these Terms of Service is found to be unenforceable or invalid, that provision will be limited or eliminated to the minimum extent necessary so that these Terms of Service will otherwise remain in full force and effect and enforceable. The failure of either party to exercise in any respect any right provided for herein shall not be deemed a waiver of any further rights hereunderc. Force Majeure. We shall not be liable for any failure to perform our obligations hereunder where such failure results from any cause beyond our reasonable control, including, without limitation, mechanical, electronic or communications failure or degradation.d. Assignment. These Terms of Service are personal to you, and are not assignable, transferable or sublicensable by you except with our prior written consent. We may assign, transfer or delegate any of our rights and obligations hereunder without consent.e. Agency. No agency, partnership, joint venture, or employment relationship is created as a result of these Terms of Service and neither party has any authority of any kind to bind the other in any respect.f. Notices. Unless otherwise specified in these Term of Service, all notices under these Terms of Service will be in writing and will be deemed to have been duly given when received, if personally delivered or sent by certified or registered mail, return receipt requested; when receipt is electronically confirmed, if transmitted by facsimile or e-mail; or the day after it is sent, if sent for next day delivery by recognized overnight delivery service. Electronic notices should be sent to email@example.com. No Waiver. Our failure to enforce any part of these Terms of Service shall not constitute a waiver of our right to later enforce that or any other part of these Terms of Service. Waiver of compliance in any particular instance does not mean that we will waive compliance in the future. In order for any waiver of compliance with these Terms of Service to be binding, we must provide you with written notice of such waiver through one of our authorized representatives.h. Headings. The section and paragraph headings in these Terms of Service are for convenience only and shall not affect their interpretation.Contact. You may contact us at the following address: 1156 6th Ave, 7th Floor, New York, NY 10036.