US wheat futures closed higher after setting ten year lows on Tuesday. Technical buying saw the bottom pickers in buying up cheap contracts and funds covering exposed shorts. Fundamentally nothing has changed and wheat will continue to struggle as the world consumes what is likely to be another record crop.
With funds holding a significant short in wheat it keeps the door open for some short term movement higher. Movement that those holding old crop grain may be tempted to take advantage of but the key to this will be if local cash buyers decide to follow the volatility in US futures. This is something most have not been tracking dollar for dollar for some time now, which if you look at a basis chart since June you will determine is a very good thing. East coast wheat values held on well in comparison, “well” you say, things could have been much worse.
Australia is not the only country with increasing basis against US values, take Paris milling wheat for instance. Futures basis there is at the highest level it has been since this time two years ago. It’s more easily explained than the Aussie basis, France almost got washed away a couple of months ago. But it does highlight the lack of interest the rest of the world has in 1. US wheat, 2. US wheat futures.
Canola did not follow beans higher last night. A perfect run for Canadian canola have many thinking production estimates will rise.