Highlights

  • December soft red winter wheat settled at 599.50 cents a bushel on Wednesday, up 6.75 cents on short covering.
  • USDA raised world wheat production by about 5 million tonnes to 827.5 million and ending stocks to 280.8 million.
  • GrainCorp's underlying EBITDA fell 27% to A$223 million as grain handled dropped to 28.6 million tonnes from 31.6 million.
  • ABARES forecasts the 2026-27 east coast winter crop at 26.6 million tonnes, down from 35.2 million in FY26.

Chicago wheat rose on Wednesday, but the bigger lesson came from Sydney. December soft red winter wheat settled at 599.50 US cents a bushel, up 6.75 cents, after a run of losses that took it to an 18-week low of 589.25 cents on 9 November. The lift came from short covering, not wheat-specific news. Meanwhile GrainCorp (ASX:GNC) reported full-year results showing what a global grain glut does to a grain handler.

A Bounce Inside a Downtrend

Prices sit far below the 28 August peak of about $7.67, a three-and-a-half-year high.

Geopolitics explains much of the recent move. Hopes for a Russia-Ukraine settlement have eroded the risk premium that built up over the summer. Talks in Abu Dhabi on 10 and 11 November produced a prisoner exchange but no Black Sea shipping deal. Whether that shores up prices is unclear; short covering fits that reading, but the market has not given a clear verdict.

What USDA Said

The November estimates left US 2026-27 wheat production at 1.534 billion bushels and exports at 750 million. They raised ending stocks by 3 million bushels to 743 million and cut the season-average farm price by 10 cents to $6.20.

The global picture looks heavier. World production rose by about 5 million tonnes to 827.5 million and world ending stocks to 280.8 million, with Argentina raised to 23.0 million tonnes and Australia to 32.5 million. Russian exports were trimmed to 39.0 million tonnes and Ukrainian exports to 11.5 million, which offers some support, but larger Southern Hemisphere crops weigh on prices.

GrainCorp: Volumes and Margins Matter More Than Price

GrainCorp is the clearest listed Australian exposure to east coast wheat. Its Earnings come mainly from storing, moving, exporting and crushing grain, so profits depend on how much grain growers deliver and on export margins, more than on the flat wheat price.

FY26 shows how that works. Underlying EBITDA fell 27% to A$223 million, within guidance, and underlying net profit after tax fell to A$31 million from A$87 million. Total grain handled dropped to 28.6 million tonnes from 31.6 million. In September the company blamed oversupply, low prices and reduced grower selling for squeezed margins, and when growers hold grain back hoping for better prices, fewer tonnes move through its network.

The outlook is mixed. ABARES put the 2026-27 east coast winter crop at 26.6 million tonnes, below the FY26 crop of 35.2 million. Management said harvest activity was accelerating strongly, with 2.1 million tonnes received so far, and expects better export and crush margins in FY27, but earnings guidance is not due until its February 2027 annual general meeting. Its nutrition and energy businesses, including record animal feed sales, add some diversification.

US Traders: Merchandising Versus Processing

The big US grain traders show a split between merchandising and processing. ADM raised its 2026 guidance for the third time this year, yet Ag Services profit fell 9% to $172 million while oilseed crushing drove the gains, so lower wheat prices are not a direct proxy for its profits.

Bunge, which absorbed Viterra, said better grain merchandising was more than offset by weaker ocean freight, sugar and wheat milling, and adjusted segment earnings before interest and tax fell to $87 million from $120 million.

What Could Change the Picture

Prices could firm if the Black Sea situation makes exports harder, Southern Hemisphere harvests fall short of USDA's estimates or importers keep buying at these levels. They could weaken if a shipping deal emerges, Australian and Argentine crops come in larger than expected, or the dollar stays strong. These remain possibilities rather than forecasts.

Watch Thursday's export sales, Friday's CFTC report for signs of fund short covering, ABARES's December crop report and GrainCorp's harvest receival updates. News from the Russia-Ukraine talks remains the most likely short-term catalyst.