The US weather map is creating a conundrum for the wheat trade in the States. The forecast is for good rain in the spring wheat belt but little to no rain in the hard red winter wheat belt. Looking closely one might even come up with the scenario there could even be too much rain in some parts of the soft red winter wheat states in the north east.
The wheat futures market was overbought and futures being futures we see technical selling triggering a move lower. Importantly though the gap created a few days ago was filled last night. This just leaves the gap from March 19th to fill. This would test 495c as the downside in HRW May futures. One would think that without rain in the forecast this may be a big ask but never underestimate the ability of a fund manager with a hand full of sell order to influence this market.
China has auctioned off 3.33mt of corn stocks over the last couple of sales. This is a good result as 3.8mt was offered up. The sales included some 2013 stock but most of the corn on offer was 2014 stock. The older product went through at US$219.50/ tonne but the 2015 product was much higher priced at US$252.25 / t.
A further 3.11mt will go up for auction today. The spat of sales is an attempt to slow the increase in domestic corn values.
It’s hard to extrapolate these values to be relevant to sorghum values but US$252 in north China would have to come in significantly less than current Aussie sorghum values even with a $50 premium. Let’s just hope the Chinese don’t loose their taste for Baijiu.