Funds remain net sellers even though we saw a little upside in wheat and corn futures at Chicago last night. Corn futures found support from some solid US export numbers. At 2.42mt it was towards the higher end of the trade estimates prior to the release. Producer sales have been light as prices continued to fall during the harvest period. A bounce in either basis or futures is needed in the states to stimulate physical volume.
Wheat futures were the clear winner. All US grades sharply higher, closing the session pretty close to numbers seen around this time last week prior to the fall. The trade appeared to be buying on the back of recent Chinese business, talk about a delayed reaction. There was also speculation that El Nino will further reduce yields across the Southern Hemisphere…….. these guys are right on the ball with everything today ……… someone must have lifted the mushroom they’ve been living under this week.
Technically the US wheat futures market has the largest value of speculative short positions it has seen. Constant selling of wheat at any opportunity has primed that market for what could be a monumental recovery…… or not. What could the catalyst be for such a rally. A fund roll, Russia actually selling 7mt of wheat to India, or 2mt to Egypt, or the Russian gov buying 2mt of stocks. What about money repositioning from other investments, like bonds or treasury. What about sharply lower wheat production in Argentina and Australia. What about increased purchases from China. You know, just the kind of things we’ve seen announced or confirmed over the last month.

The big loser in last nights futures session was Paris rapeseed. The Feb 244 slot fell E11.25 / tonne. Taking the AUD / Euro movement into account, which doesn’t help, the move converts to fall of AUD$21.25. Interestingly Chicago soybeans were a tad firmer and ICE canola was flat.