Softer closes in US wheat future basically wiped off any of the moves higher during the week. So what happened.
Without digging too deep you can come to a couple of conclusions. The weather map shows 20 – 50 points is due across the HRW belt over the next week or so. Not exactly drought breaking rain is it.
Possibly the funds parked money in grains while the Wall St market had a wobble mid week and the last couple of days saw that money pulled back out. Does this spell the end of the potential upside in US wheat futures, maybe, maybe not. The threat of interest rate hikes and the subsequent inflation usually increases food / commodity prices. Potentially we may continue to see the punters use grains as a hedge against US inflation.
The spin off may well be weaker basis levels here. We were expecting weaker basis anyway given a somewhat average winter crop but with the US domestic market values increasing and world values not able to follow could that not signal a weaker basis over Chicago here, only time will tell.
In an attempt to draw more sellers into the market the Egyptians have changed their trading standards again. Minimum protein levels have been reduced by 0.5% and considerable changes to demurrage costs may attract more tender participants. Demurrage was an issue as boats were taking too long to unload and at $12,000/day it adds up quickly. The maximum demurrage will now be charged for 12 days. Sieving fees were increased from US$2/t to US$3/t. Tender biz last night saw Russian wheat offered at US$206.60 FOB.