In its Agri Commodities Monthly Report for October, Rabobank noted short-term support for wheat futures worldwide on the basis of tightening global fundamentals.

“This support is forecast until further confidence emerges with respect to new 2019-20 crop supplies,” Rabobank said, noting that Northern Hemisphere plantings were nearing completion as it was published on Oct. 19.

Rabobank called the record Russian export pace, with 13.8 million tonnes exported from July to September, “unsustainable.”

“As Russian exports slow or are potentially restricted, demand would predominantly shift to the U.S., Argentina or even the E.U.,” Rabobank said.

Forecast Russian exports for 2018-19 of 34.5 million tonnes would drive the Russian stocks-to-use ratio down to 8%, an 18-year low.

“Reduced wheat supplies forecast this month for 2018-19 and strong wheat prices are leading to slightly lower projected use and trade,” the U.S. Department of Agriculture’s Economic Research Service said in its Wheat Outlook report for October. “While global wheat food use grows along with population increase, at about 2% a year, projections for global feed use in 2018-19 have been declining. This month feed and residual use of wheat is down another 0.5 million tonnes, and 4.2 million tonnes lower than estimated for 2017-18.”

The USDA projects a 3.5-million-tonne year-on-year increase in feeding of wheat in China, on the basis of policy rather than world prices, but with total non-U.S. feeding, not including China, down by 7.7 million tonnes year-on-year.

“The high price of wheat relative to other grains is expected to cause a switch to corn feeding in some places where wheat is normally used as feed,” the USDA said. “In comparison to last year, wheat feed and residual use in 2018-19 is projected down 5 million tonnes for the E.U., 3 million tonnes for Russia, as well as for South Korea, Indonesia, Vietnam, Philippines, and some other countries.”

The International Grains Council (IGC) in its Grain Market Report issued at the end of September added, “With currency movements often influential, initial declines in U.S. dollar-denominated world wheat export prices were partly reversed by the end of the month.” The IGC’s wheat sub-index lost 2% on the month.

“Ample nearby availabilities weighed on sentiment, with much of the focus on record early-season exports by Russia, which dampened buying interest from other origins,” the IGC said. “While Russian government officials continued to rebuff market talk of export restrictions, some price underpinning came from ideas that demand would shift to other suppliers as Russia’s availabilities tighten. There was also price support from deteriorating production prospects in Australia, harvest delays and concerns about potential quality problems in Russia and Canada, as well as an acceleration of international buying interest.

“In Russia, reports of widening discounts for lower protein supplies underscored generally poorer crop quality than last season, while significantly higher prices for deferred months versus spot positions illustrated the tighter supply outlook. Early-September falls in export prices were mostly reversed later in the month, partly on currency changes, and quotations (12.5% protein) softened by a net $3 m/m, to $224 fob, with January values at about $248 fob.”

The IGC said prices in the E.U. were “underpinned by tight availabilities and strong internal values amid robust local demand.”

Export interest was slow and cumulative export shipments were about one-third down on the year.

“In France, dollar-denominated grade 1 export quotations fell by $2, to $241 fob (Rouen), while German B quality dropped by $5, to $248 fob (Hamburg),” the IGC said.

Argentina’s domestic prices were supported by concern over the effect of dry weather on the new crop, the IGC said, but it quoted U.S. dollar denominated new crop (December) export quotations down by $3 on the month, to $222 fob (Up River).

“New season (January) futures in Australia extended contract highs on escalating production concerns, and APW export values (October) climbed by $22, to $338 fob (Adelaide),” the IGC said. “Market sentiment in the U.S. continued to be dented by lackluster exports. Since the August GMR, U.S. SRW export quotations dropped by $6, to $216 fob (Gulf), while HRW lost $1, to $243 fob (Gulf), and DNS (14%) receded by $4, to $254 fob (PNW).”