US wheat futures were under the pump again last night shedding value across all months on all three contracts. The biggest moves were on the closer by, old crop contracts, but weakness has now spread into the new crop as carryover stocks will become an issue in the US even if it is the smallest sown area in 100 years. It’s not very encouraging for those who will sow spring wheat is it.

Interesting to note the difference between the ASX May 2019 wheat contract and the May 2019 CME Platts Australian FOB wheat contract. The ASX contract is a deliverable contract while the Platts is cash settled, so in theory use it to hedge what you will. The ASX contract converts back to between US$299 – US$305 FOB, the Platts contract is quoted as being FOB, so US$280.25. Wheat off the west coast is offered onto the export market at roughly US$265 to US$275 FOB, so in theory at least there appears to be arbitrage there for the international punter with a deep pocket.

With US wheat futures falling by up to 10% week on week and cash offers from Europe and the Black Sea slipping I guess it should have been expected that the bargain hunters would soon be out. An Egyptian tender closed yesterday with around 360kt being booked (still trying to confirm final tonnage). The price on average was about US$8.00 less than the last tender. French wheat was the cheapest on offer with Russian wheat also in the final order.