I may have jumped on the wheat bull wagon a little early yesterday. The technical Tuesday recovery now appears to have been nothing more than a dead cat bounce. US and Paris wheat futures both shedding value overnight.
The biggest thorn in our side today will be the jump in value of the AUD, up 0.85% against the US dollar overnight. Those commodities that were flat or even a smidge higher, which were few, could even show downside potential thanks to the jump in the AUD against most major currencies.
For instance Winnipeg canola futures closed in the green, +C$2.00 in the Jan 24 slot, the nearby was up C$4.20, or on the face of it AUD$4.59, but the improvement in the AUD is worth -AUD$3.80. Resulting in a pitiful upside of just AUD$0.79 / tonne nearby and a plausible loss for the new crop.
All three US wheat grades saw double digit losses in USc/bu, the AUD also doing a number on that conversion. Nearby soft red winter wheat at Chicago was back around AUD$5.24/t, the stronger AUD adding another AUD$2.88/t to that loss.
The only FOB cash wheat value I can find that was a little higher was Ukraine, and that move was minimal. Even FOB Russian wheat in AUD/t is lower. EU, US, Canadian, even Argentine wheat all closed AUD$5.00 to $15.00 lower.
The USDA World Ag Supply and Demand Estimate report was out last night. Looking through the post report analysis I see a lot of punters are saying it had little supportive news for wheat in it. It may be a little more bullish wheat than they think. World production was pegged at 790.75mt, -7.44mt, imports and consumption were all lowered and still we see ending stocks lower by 1.34mt, still high yes, but lower at 252.27mt. The USDA bumped Argie wheat up 500kt, to 17.5mt, Aussie left at 29mt, Russia back 5mt to 83mt, Russian export projections were reduced 4mt to 48mt and Russian domestic use was reduced 1mt netting a small 250kt reduction in Russian ending stocks. Major exporter wheat ending stocks was down 1.93mt to 29.78mt. Some questionable numbers include, Aussie carry in was increased 500kt and exports reduced ?? 500kt. Similar smoke and mirrors for Argie carry, in and out too.