Chicago wheat opened higher and closer not far off the session high. The stochastic still indicates that March SRW futures are overbought at Chicago don’t be surprised if we see the trade sell this rally.
A technical reason for support could potentially be the Goldman Sachs roll during January. It amounted to nothing really last year but with the funds thought to be holding significant short positions in this market we may see unfounded technical support as shorts are bought back. If this occurs we will need to see fundamental support in the form of either a significant weather scare in the northern hemisphere or some major consumption increases to sustain any potential upside.
Export parity for most nations continues to be dictated by Russian wheat. Black Sea wheat sales are dominating N.African business and are making some markets into Asia a little harder to crack. The higher protein harvest both here and in Canada is also eroding the premium for higher grade milling wheat into Asia.
The low price for wheat may be starting to result Black Sea farmers reducing wheat area and following the trend being set in almost every other major wheat exporting nation. With winter wheat sowing now complete we see Ukrainian area back from 6.8mha of winter wheat last year to around 5.9mha this marketing year.
The major driver of US values remains at their domestic level though and that is the very cold conditions currently pushing through the Midwest with much of Kansas seeing mornings as cold as -15C this week, and predicted throughout January, with poor snow cover.