Wheat markets have become a little bit like U.S. President Donald Trump — they both react forcefully and swiftly to any news.

In early August, wheat futures jumped five to six percent after rumours surfaced that Ukraine, the world’s fifth largest exporter, would impose export limits on wheat. Shortly after, Ukrainian officials said it was a miscommunication: they were not introducing export limit. Wheat prices dropped.

Then, on Aug. 10, wheat futures sank in response to the U.S. Department of Agriculture’s World Agricultural Supply Demand Estimates. The report reduced world wheat supplies by 6.6 million tonnes, mostly because of lower European Union production. However, the news from the Black Sea region was more positive and that put pressure on futures prices.

“Russia’s wheat production is increased one million tons to 68 million on continued favourable conditions for spring wheat,” the report said.

The recent volatility reflects how traders are feeling about wheat supplies.

“The market is very nervous about the global wheat situation,” said Bruce Burnett, GlacierFarmMedia’s director of market and weather information.

“Any news out of the major exporters that indicates there are some issues is going to move the market.”

While the initial market reaction to WASDE was negative, the report contained a decent amount of bullish data for Canadian wheat exports and prices:

• WASDE cut EU exports by 4.1 million tonnes from its July report because of drought and lower production.
• At 31.75 million tonnes, Russia will lead the world in exports, but that’s down seven million tonnes from 2017-18.
• Australian exports are projected at 15 million tonnes, which is down seven million from 2016-17.

Those factors should propel American wheat exports higher, WASDE said.

“Projected (U.S.) wheat exports are raised 50 million bushels to 1,025 million on substantially lower exportable supplies for the EU and limited additional export capacity of several other major competitors.”

If there’s more demand for American wheat it’s logical there should be increased demand for Canadian wheat, considering the U.S. is engaged in a trade war with half of the world.

As for Ukraine, which is a major competitor for Canada, WASDE shot down the idea of export restrictions. It projected Ukrainian wheat exports at 17.5 million tonnes — the same figure as July.

“I was a bit surprised when the thing (export limits) came out,” Burnett said.

“Their production is down … but it’s not at that crisis level that would (be necessary) for this to happen.”

The USDA boosted Russia’s wheat production from 67 to 68 million tonnes in the WASDE report.

“Prices are racheting upwards (in) that region,” Burnett said.

Hard red spring futures in Minneapolis climbed this summer, going from US$5.30 per bu. in mid-July to around $6.30 in the second week of August.

Looking further ahead, there is minimal downside risk, but it’s unlikely that wheat futures will “zoom higher,” Burnett said.

“You would have to see another production difficulty being confirmed,” he said.

“Australia is dry right now, especially eastern Australia. Production estimates (there) are starting to drop.”