There was a nice recovery in US grain futures overnight. The analyst are calling it bargain buying after the sharp losses of the previous session. One can’t help but think that the rally in wheat may limit US export potential. This has been a common thought for a while now though but it hasn’t seemed to limit demand from Asian destinations for US wheat.
The severe winter conditions currently being experienced across the US Midwest often triggered a round of buying. With corn leading wheat and corn being viewed as cheap this will be what keeps wheat from falling too far. Those spread trading wheat / corn may find themselves looking at the 181c spread and thinking they can’t go wrong….. there’s always the potential to be wrong in the futures market.

Fundamental news is mixed, as it so often is this time of year. We have the punters concentrating on the new crop area reports and then there is the demand side driving the old crop. New crop area is the hardest to get a handle on, India are out there saying they have sown 81.59 million acres, that’s a record. Rainfall in India has been generally favourable too with some parts of Uttar Pradesh, where around a third of India’s wheat crop is grown, receiving up to 150% – 300% above average rainfall over the last 30 days.
Then we have some talk of a 10% reduction in area in France. The punters are blaming rain but looking at the rainfall anomaly maps for France you can’t help but think these guys may be out a little.
Tunisia picked up 117kt of durum overnight for roughly US$332 CFR from Glencore.