The dry weather across most of the Australian wheat producing regions got a mention in international wires overnight. Not that it makes much difference to a fund manager with a fist full of sell orders. By the end of the session at Chicago all three US wheat grades were again lower, taking SRWW fortnightly losses to 96c/bu (AUD$52). This does tend to make the AUD$4.00 slippage to local prices a little more bearable.
Australian wheat now appears to be being priced more so from local consumer demand, grade S&D’s, and physical export sales values more than a reflection of US futures (as it should be) so it does tend to show just how far away from reality the US futures market can deviate at times.
Cash values for US wheat out of the Pacific Northwest have also fallen. During the same window that Chicago futures have fallen AUD$52 HRW values out of the PNW have fallen just AUD$23 (using daily AUD spot rate). White wheat values out of the PNW are actually up over AUD$5.00 for the fortnight after recent gains were half sustained. The strength in white wheat values should, if nothing else, underpin Australian values in the short term.

Fundamentally we see some weather issues arising in Australia. A quick look at World Ag Weather and we see much of the Australian wheat belt has seen between 20% and 40% of normal rainfall over the last 30 days, a stark contrast to the spring conditions.

China again sold all wheat offered in their last government tender. In total 141.75kt of wheat was cleared at roughly US$410 per tonne. China is not the only country busily auctioning off state owned stocks in an attempt to cap domestic prices. India sold 507kt of state reserves, about half of what was on offer.  India is expected to produce 12mt to 12.5mt of rapeseed this harvest, an improvement over the 10.5mt harvested last year.