It’s hard to wake the US futures market at the moment. The frost reports from Western Australia tried early in the session but obviously the funds are not in a position to buy wheat so there was little ongoing interest in running the market up.
Temperatures across the SW corner of the WA wheat belt fell as low as -4C in some locations. There are not too many punters willing to put a number of the production loss but there are plenty of reports out there calling it devastating and likely to reduce the chance of WA producing the current estimate of 9.9mt.
Production in the Albany port zone could to be the worst hit. In 2017 the Albany port zone produced 1.1mt of wheat. The current estimate for that region is probably closer to 1.6mt. Wheat usually flowers there in early Oct. A production loss percentage of 20% might expect to see losses around 300kt. So in theory at least, a loss range of 200 – 400kt is possible. Not exactly enough to bull the international market but probably enough to raise some concern for domestic supply unless exports are reigned in a little more.
In the US we saw soft and hard wheat futures weaker by the close while spring wheat futures managed to gain a few cents per bushel.
Black Sea wheat futures continue to see a carry in the market of about $5.00 + for Oct vs prompt and that $5.00 premium is carried forward per month out to December which is there at US$230 FOB.
Reports Saudi Arabia picked up 630kt of wheat at good values also failed to spike the US futures markets.