US wheat futures found considerable weakness again today, making 4 of the last 5 sessions a lower close. Losses in Chicago SRWW nearby futures from the high close of 1277c/bu set on the 17th of May now amount to 122.75c/bu (AUD$63.46).
Values out of the US Pacific North West were also lower, HRWW falling at the port by around AUD$13 and DNS wheat slipping about AUD$6. White wheat values out of the PNW were also lower, down about AUD$7 per tonne. Looking closer at white wheat, we see club white out of the PNW destined for Japan would roughly land C&F Japan at something close to US$483. On the back of an envelope this converts back to an APW price ex farm LPP something close to AUD$565.
Still on wheat we see Russian 12.5% milling wheat into China priced at US$467 C&F, some US$133 under similar wheat out of Argentina but some US$120 above where the trade is offering wheat out of Western Australia. Looking at cash bids to the producer in WA we see APW1 trading out of Geraldton yesterday at AUD$476. This is equivalent to about US$390 C&F China, about US$50 above where the last trade into China for Aussie wheat was noted to have taken place. This does tend to indicate that if China wish to continue to buy Aussie wheat they will need to increase their bids.
It does tend to highlight the significant disconnect between where wheat is trading and where US futures are. Take for instance HRWW out of the PNW at US$502 FOB, an absolute mile above current world cash values using Aussie or even Russian wheat as a benchmark into the Asian market.
Does this mean US futures are vastly overpriced, well that’s for the futures market to decide, but just remember nothing fixes high prices quicker than high prices.
International sorghum prices are relatively flat, NOLA mixed, Argentine FOB estimates flat and Chinese C&F values are also flat. AUD flat.