Kansas wheat futures lead the US grains market higher in overnight trade. KC HRW May 18 was up 11.25c/bu (AUD$5.30/t) by the close with slightly lesser gains across the outer months. Technically the contract is overbought, it may have another session or more upside in it but the charts tend to indicate profit taking is likely before the end of the week. Longer term we may trend higher though but this will depend of the amount of rain the HRW belt gets over the next month or so.
The HRW contract for Dec 18 closed at US$205 / tonne (AUD$263) with new crop H2 bid here at AUD$303 / tonne that indicates a basis of 84c for Dec 18 compared to current crop basis over May of 197c. This tells us two things, new crop contracts are rubbish and there’s a bunch of basis in the old crop bid here.
A quick look at the US radar will tell you the reason why the HRW price is firmer. Showers are missing the driest parts of Ok and Ks and the 8-15 days forecast is not showing any significant falls across the HRW belt either. Looking at the COT report most punters are getting on the long side of the market, more bought than sold, at Chicago. This would also explain the drive towards overbought on the stochastic. It may take more than dry weather to keep up the forward momentum but it is certainly a great start to the silly season.
We still need to wait until April 2nd before the USDA release their weekly crop progress reports but the monthly report has shown a decrease in crop condition in Kansas.