US grain futures were lower across the board last night. All three wheat grades, corn and soybeans all slipped lower by the close. The row crops were generally lower on the back of technical selling while US wheat values appear to be having a reality check. Soft red winter wheat futures did close near the session low in a lower volume session at Chicago.
The stochastic does show that the charts are now a little more neutral but trending lower towards oversold. This may just be a breather and dependant on whether Russia can sustain higher prices out of the Black Sea and what Australian offer values into SE Asia are once the header start here. Weaker outside markets in the states were also an influencing factor for grain. The stronger US dollar and weaker Wall St continue to spook a few punters.
The weaker AUD should counter much of the weakness in US wheat futures here today. The same can be said for canola, in fact the weaker AUD/CAD should more than counter the weaker ICE contract. Will the fall in the AUD be passed on as better local cash canola bids is the big question. I’m tending to lean towards a further reduction in basis over ICE.
Much of Cordoba in central north Argentina remains in drought. This has seen a further reduction in the Argentine wheat forecast as well as a reduction in the sowing estimate for both corn and soybeans this summer. With the threat of El Nino further reductions may be just around the corner. The Buenos Aires Grain Exchange predict a 17.5mt wheat crop this year, a year on year reduction of 1.3mt. Argentine wheat values are firmer at US$248 up river, making their wheat some US$20+ higher than US offers into Asian markets.