The Germans have tried to quantify crop losses from the recent flooding and have put the total production loss at somewhere between 150kt and 300kt. That’s not a lot in the big picture, but the quantity of wheat that could be downgraded due to the weather events across Romania, Germany and France over the last week or two is going to be the key moving forward.
Most wheat crops in the worst hit regions were ready to be harvested or were very late in their development phase. There is significant risk of black tip, fusarium and sprouting. Combine these events in Europe with the production issues in the spring wheat regions of N.America, drought in Argentina and a very soft start to the winter crop program in Australia and it’s becoming very hard to talk the spread to prime grade protein wheat lower.
In Australia forward contract spreads for APH1 to APW1 are small, around $15. The big question is will the market duplicate what it does with canola in a good oil year and simply reduce the base price in order to increase grade spreads or will we see actual APH spreads increase as we see APW values increase. Fundamentally one might lean towards the later. White wheat supplies in the US will be much tighter this year. Production has been hit by dry weather and we currently see Club White Wheat at 10.5% protein offered out of the PNW for 910c/bu. On the back of an envelope this could easily equate to a comparable Aussie port number over AUD$400/t and even higher for 14% DNS wheat.

Cash bids across SE Saskatchewan for both durum and spring wheat were higher again overnight, 1CWAD13 durum +C$1.99 in Dec21.