Strength in wheat futures values was found on the back of declining world production estimates lead by the reduction in Australian output by ABARES. The official estimate is now 19.1mt. The estimate includes a revision higher in WA yield estimates but may not take into account the losses across the Riverina and Northern Victoria caused by the late August cold snap.

Wheat futures around the world were looking for a reason to rally after trading only fractionally higher in only one of last week’s sessions at Chicago. All three US wheat contracts closed in the black. Paris milling wheat was firmer, opening the session at E185 and closing at E195/t on the nearby. Even the Black Sea futures market closed higher.

The Black Sea cash market wasn’t as pushed to look for upside. The subconscious threat of Russia potentially limiting wheat exports at some time in the future continues to be something the trade are considering in offers, get it out the door quick. One might think that this is probably more of a reason for upside than downside longer term though. Their wheat certainly is cheap enough as the export pace remains very strong. Volume continues to be bought with about 1.31mt loaded last week as offers slipped another US$1.00 to US$219 FOB.
The futures market was probably more concerned with squaring up a little leading into the USDA report due out tomorrow night.