A number of international events went towards a recovery in US wheat futures overnight. There’s both fundamental and political influences at play now. There was a degree of technical buying, managed money shorts finding some coverage. If global events suddenly turn bullish grain, the funds may find themselves having to unwind an exceptionally large short position in a hurry. That alone would hurt them, so expect to see technical unwinding of these shorts on even the least bullish of news and events.
Wheat was helped higher by some spillover buying in soybeans. Unlike Winnipeg canola futures, which were smashed last night. Even cash bids across SE Saskatchewan were sharply lower. PDQ noting the average ex farm bid for an October lift was back C$30.47 / tonne for canola. The weaker AUD will go some ways to countering this today limiting a potential AUD$22.88 loss in futures into a AUD$17.56 loss. Paris was mixed, nearby and Feb slots were lower while mid 2025 month were a little firmer. The weaker AUD turned nearby into a potential gain though.
Back to wheat. The political side of the market found support on the news that Ukraine was going to limit wheat exports during the 2024-25 marketing year. This is good news, but the proof will be in their longer term volume. I assimilate this to that time a year or two back when India was going to be a major wheat exporter and fill the void left by smaller Black Sea volume, we all know how that panned out. The most obvious thing to watch in the Black Sea region now is how dry it is in the Russian winter wheat regions. It’s early days, but without some good rain winter wheat sowing could be a bit of an issue. Something to watch as we move through Sept / Oct.
US wheat export sales remain strong for wheat, as they should be given the current price of US wheat. Interesting to see the DNS cash values out of the US Pacific Northwest and spring wheat futures were a little different though. MGEX futures were up just 4.75c/bu, at today’s AUD that’s about AUD$2.60/t. Cash prices out of the PNW for DNS wheat were closer to +AUD$18.00 compared to yesterdays conversion, whats the go there ?