International cash values and futures for wheat were generally a little higher in native currency overnight. The moves look more speculative than fundamentally driven. There’s a monthly USDA World Ag Supply and Demand Estimates (WASDE) report due out tonight. This is more likely the usual positioning prior to a big report. The punters are trying to call the market driven by lower Russian exports going forward. That’s a pretty big pill to swallow considering that the latest private production estimates for Russian wheat production were increased by a couple of million tonnes, and Moscow just removed their wheat export tax.
If Russia is struggling to put on nearby sales due to a late start to their harvest, this is only going to congest things in the mid to long term. We may see a demand lull as Russia moves more slowly into harvest, a week or two late, but unless you see someone like the USA capitalise on this slight delay and actually make sales to consumers Russia may have sold too, than it’s a mute point at best. The net result is still a mid term increase in supply from the worlds largest wheat exporter, and one of the most competitive regions of supply in the world, the Black Sea.
The move in international wheat values is a mute point here today anyway. The AUD is stealing that increase away as conversion values from most major exporters back to an AUD price are generally lower. The move in the AUD is equivalent to roughly 5c/bu. That means we need to see a positive move in APW / CBOT basis to cover the move in the AUD. That’s not impossible by any means, but to ask the local market to track higher as the dollar goes up, on a Friday, prior to a WASDE report, might be asking for a glass of the good stuff while you’re in a XXXX shout.
Taking the AUD into account we see most international values down AUD$2.00 to AUD$8.00 per tonne compared to yesterdays conversions. Paris milling wheat futures and cash wheat FOB France are the biggest exception to this. Paris milling wheat futures gained €4.25 per tonne in the Dec 25 slot. Cash values FOB Rouen were also higher, the conversion there compared to yesterday gaining roughly AUD$5.84 / tonne. France has been very dry this spring / summer. Are we about to see an adjustment reflecting this dryness in tomorrows WASDE report…….speculation or not, it’s still a nice move.