The weekly USDA crop progress report was the catalyst for a recovery in wheat futures last night. The weather forecast didn’t hurt any either. The hard red wheat belt continues to look dry over the next couple of weeks. This may well see the crop try and mature earlier too if temperatures permit. This can exacerbate the problem as it then opens the crop up to late freeze damage. They call this the silly season for a reason boys and girls.
Some punters also think that with soybean prices where they are the USDA may have also over cooked the spring wheat acreage in the north. The gross margin calculator is tending to push producers towards soybeans and away from wheat so keep an eye out for acreage adjustments in the next report or two.
Technically HRW May futures are approaching neutral territory so we may well see more buying in tonight’s session if it can get a run on.
The only real negative for wheat continues to be the massive stocks currently on hand but demand is ticking over nicely with business to Algeria and Japan expected to be announced this week. We also have the FSU production estimates to consider. Ukraine is talking similar wheat numbers to last year, most consider this unlikely considering the seasonal differences. It would also be a big ask to see Russia roll out another record wheat year, it’s getting dry. The strong oilseed market should also buy acres away from wheat.