In the USA wheat futures were hit pretty hard overnight. All three grades registered significant losses. Soft red winter wheat and surprisingly spring wheat were hit the hardest. It’s the middle of harvest in the USA, it’s to be expected. On the cash side of their market bids were generally flat, not following the futures market lower.
Kansas buyers are not about to discount good wheat at the moment, test weight and protein is all the place and basis is reflecting a good premium for better wheat which made the fall in spring wheat futures all the harder to explain from a fundamental perspective.
For instance HRWW with a protein level of 14% has a basis of about +100c/bu over 11% wheat delivered Kansas city, to you and me that’s a premium in AUD / tonne of about $43 between 11% and 14%. The current spread here is about $10 or $15 if you can get a trader to commit to a spread at all.
In the Pacific North West of the USA, where the white wheat is mostly produced we see cash bids were down just US$2.00 per tonne for the week. SWW with a protein of 10.5%, the same as out APW1, was bid at US$6.00 / bu, US$220.50 / tonne, FOB (AUD$321). You might expect to see a FOB value from Australia around US$3.00 lower than a US FOB value if priced into Japan. If so we would see the current cash bid for APW1 here basis FOB Newcastle come in somewhere around, US$217 to be comparable, it is in fact closer to US$223. So it is well in the ball park. Interesting to note the Platts futures product for Aussie FOB wheat is closer to US$225.75.
Private analyst on the ground in Russia have increased wheat production estimates there to 79.5mt.