US wheat futures were lower overnight as the punters accessed poor US weekly sales and the impact the improving US dollar may have on future sales. The bright side is the sharp fall in the AUD overnight will counter the downside potential here.
Russia updating last year’s wheat production number to 85.9mt didn’t help anything either. It kind of fly’s in the face of the current tax and tariff setup Russia is using to keep wheat supplies at a domestic level though doesn’t it. Looking at the Russian S&D we see carry in was roughly 7mt, production is now pegged at 85.9mt, giving a supply of 92.9mt.
The USDA pencil in Russian domestic demand at 41.5mt while many private analyst have it much higher, some closer to 47mt. Combine 47mt with exports of 39mt (USDA) and disappearance is set at 86mt, leaving a carry-over stocks number of 6.9mt, as opposed to the USDA carry out of 12.53mt. Now a S:U ratio of 15.5% (USDA) isn’t really a big issue, it’s tight but it’s not excessively tight, but a S:U ratio of 8% would indeed encourage some form of export restriction. I’m punting the USDA data isn’t exactly right.

The cold snap in France early this month had no impact on winter wheat according to the latest crop condition report which pegs the Good / Excellent rating at 87%, that’s pretty high. A good spring and summer will see French production exceed last year’s number.

We may need to see the March contract roll off the board to get some more technical life in US futures. Cash prices are mostly competitive.