The US markets were generally technical in nature last night. The funds hold a record short in some grains and with harvest starting to wind up in the US there’s potential that managed money may start to take profit and relocate these funds to a more volatile position.
Some of the upside potential in US values can also be attributed to the forecast for hot weather in the week ahead. This is countered somewhat by the forecast of rain accompanying the warmer conditions in the east, but not the west, where condition rating may decline.
The move higher in US corn futures managed to drag US sorghum values higher. The FOB Texas market increasing roughly AUD$5.65 per tonne when taking the softer AUD into account. Values CiF China were also a little higher, closely tracking the move in the Texas FOB sorghum market.
Cash values for both white wheat and hard red winter wheat out of the Pacific Northwest gained roughly AUD$2.00 to AUD$3.00, the softer AUD having a lot to do with that conversion.
Premium grade wheat from both the US and Canada out of the PNW was up roughly AUD$8.00 to AUD$10.00. A quick look at WorldAgWeather.com shows that the western spring wheat belt in the USA and much of the spring / durum belt in Canada has seen little useful rainfall over the last 14 days. Combine this with higher than average temperatures, especially in Alberta and SW Saskatchewan, and we discover why there’s more strength in the premium wheat market there. If this continues to play out one might expect to see an increase in APH spread values here in time.
The USDA weekly crop progress report was out after the close. Around 89% of the US spring wheat crop is now in head. The Good / Excellent rating of the US crop was flat, this week rated 65/12 – 77% versus last week at 67/10 – 77%, the US crop’s not exactly in dire straights according to the USDA. The crop condition rating for spring wheat in Canada isn’t too bad either. Alberta saw a slight decline in the G/E rating but at 73% it too isn’t struggling immensely as yet. This maybe suggesting that the improvement in spring wheat futures / cash is simply more of a technical move unless these rating change a bunch next week.