Dead cat bounce, bear trap, technical trade, call it what you will. US wheat futures found buying interest overnight reversing the downward trend of the last few sessions. Up until last night’s session the nearby SRWW contract at Chicago had shed over 236c/u since May 17th. That’s just under AUD$120 at today’s exchange rate, which I should mention is up 1.3% against the US dollar this morning.
There is not really anything from a fundamental perspective that is pushing wheat higher. The Russia / Ukraine war doesn’t appear to have an end in sight. Although there is talk of Russia allowing export corridors for Ukraine wheat if certain sanctions are lifted. So that might happen, anyone’s guess. Ukraine ports are generally pretty banged up too.
Ukraine is accusing Russia of stealing around 100kt of Ukraine wheat and shipping it to Syria, how’s that for limiting counterparty exposure. Obviously, this is nothing like the US capturing Russian oil tankers, pumping the oil into their own ships, and taking the oil home is it. At the moment it’s hard to find a country that you can’t point your finger at and accuse them of any number of international crimes. Interesting times ladies and gentlemen.

Egypt picked up 465kt of wheat out of the Black Sea, 175kt Russian, 240kt Romanian and 50kt Bulgarian wheat was booked.  This is the first time we’ve seen Egypt in the market since the sharp rally in world prices. The wheat was said to have been booked at about US$480 C&F, some 41% higher than their last tender prior to the war. Egypt is trying to limit wheat purchases at these values. Instead, the government is attempting to buy up to 6mt of the local crop. Current accumulation is sitting at 3.38mt. With the Egyptian harvest only just starting the 6mt figure looks achievable. Local production is roughly 10mt, consumption in Egypt is close to 18mt. Although year on year imports will be lower, they will still be significant buyers of wheat.