The US drought map and the forecast of more hot, dry weather for the western corn belt played a big role in last night’s recovery in soybean and corn futures at Chicago. Wheat futures were supported not only by spill over buying from the row crops but also from a number of sale announcements signalling continued good demand from importers.
A quick look at the US weather map shows much of the western spring wheat and durum region of the US back in the 38C – 40C range today. Right along the western corn belt and down into the HRWW belt temperatures will remain in the mid 30’s for much of the following week. The rainfall predictions for the US remains generally east of the Mississippi too.
Saskatchewan, although hot will not see the extreme heat the US durum belt will see but it too is not expected to see any rainfall in the short term. The Alberta Wheat Commission PDQ price advisory service showed milling wheat prices at the farm gate across SE.Sask moved higher by an average of C$9.83 per tonne for a Dec lift yesterday. Durum saw a slight decline, back $C2.52 for the same window. The spread between 1CWRS13.5 milling wheat and 1CWAD13 durum for a Dec lift now at C$70.70 / tonne in favour of durum.
Russian milling wheat FOB Black Sea was priced at US$299.75 for Dec slot. On the back of an envelope using say Egypt as an end user point this would equate roughly to a H2 price XF LPP of about $AUD375, a significant discount to current H2 bids XF LPP for prompt loading. The flip side is US prices out of the PNW into the Asian markets. HRWW is priced at roughly US$367 FOB. Using a home like Japan as a comparison we see this price equating to a value closer to AUD$477 XF LPP for a H2 type wheat. Neither of these comparisons are including the premium a white wheat like what we grow here pulls. For instance White club wheat at 10.5%p out of the PNW is roughly comparable to AUD$450  XF LPP.