More healthy gains in US wheat futures and port prices overnight have helped close the gap in the conversion between US and Aussie values C&F Asia. The discount to US HRWW to Aussie H2 wheat is now roughly US$7.00 per tonne.
Considering the differences in milling characteristics this should make white wheat competitive. This may also mean that further moves higher in US values may be reflected more in local Aussie values than they have been. That’s not a given though, basis to Chicago for east coast wheat here is still very strong, even after fall 7c/bu yesterday.
US white wheat values out of the PNW have not moved the whole time that the volatility in HRWW has increased, futures or cash. This may be telling us that the futures market and the cash market are not exactly moving in unison as much as some numbers might be suggesting. US 10.5% white wheat is now indicated at a discount to HRWW FOB Pacific Northwest, something we wouldn’t normally expect to see.
Either way we look at it, it doesn’t matter if we go to parity to HRWW we still need to be able to compete with Argentine wheat into the Asian markets. Australia does have a geographical advantage, and very good quality, but that is where it ends. Argentina has shown it is more than happy to compete on price alone. Overnight the Argentine 12% milling wheat market showed no change and works into the Asian market at roughly US$265 C&F (excluding tariffs if applicable). This compares to Aussie H2 wheat at something closer to US$277, using grower track bids here as the benchmark.

Crude oil moved higher. Talk of an Iran / US war is gaining traction, in the media at least. Iranian threats to close the Straight of Hormuz are being heard but are not being taken seriously. Past attempts to close the straight haven’t been great. Iranian allies may also be a little thin on the ground. China are showing little interest in getting involved and Russia’s coffers have been drained by the Ukraine war. What would a USA / Iran war mean for wheat, not much.