Wheat was back in favour at Chicago last night with the nearby contract pushing higher by AUD$11.40. The slightly higher AUD may take a bit of the cream away but the move but it still reflects a jump of around $8.48 when taking currency into account. The move is against some of the technical indicators for wheat at present so came as a bit of a surprise to some.
The punters are contributing the move higher in wheat, and many other outside markets, to the US Financial Aid package. The debasing of the currency seems to be working well at present and with the ability of the Fed to basically print as much money as they “need” to the reality of a weaker USD is probably something we’ll see in the mid-term. The aid package in the US made it possible we could see further payments to US farmers later in the year. So US values may not correlate to world values (even more so) as they harvest their new subsidies. Already we are seeing some private sowing estimates for US wheat increasing by up to 600kac.

The flow of grain out of some locations is now being restricted. In Argentina movement of corn and soybeans to port has slowed as local municipalities are restricting the passage of trucks. The farmer doesn’t seem to be devastated by these decisions at the moment as many were looking to store anyway due to poor prices. The expectation is that the peso will weaken further enhancing local values. Much the same as what we’ve seen happen in Russia. This should help growers there achieve a better price in the mid-term.
Algeria picked up 240kt of wheat overnight. They were expected to buy more but logistical issues in the EU are limiting supply somewhat.