US wheat futures moved sharply higher overnight on the back of the same fundamental news as it has been reading for more than week now. This leaves quiet a few analyst thinking this is another play by managed money, getting long wheat again. We have seen this in the past, managed money parking funds in wheat , pushing futures above fundamental support levels.
There’s nothing wrong with this, as long as you recognise it for what it is. I won’t call it market manipulation, but I’m sure the country millers across upcountry USA are not the main buyers on the other side.
It’s pretty grey from an east coast Aussie farmers perspective too. Much of the eastern wheat belt seeing no rain in April and the forecast isn’t great. Not ideal considering it’s the middle of winter crop sowing and everyone’s fuel tanks are full of expensive diesel, well played BP. Aussie producers see basis to futures going through the roof, now futures are also on the move again, does basis get sustained or does it start to fall. Looking around at international values we see Black Sea wheat is flat, French wheat is flat, that one puzzles me a little considering how dry France is.
Canadian, USA and also Argie wheat did move higher on the cash front last night. US HRWW out of the Pacific Northwest saw a gain of AUD$14.00/t in the conversion comparison to yesterday. Canadian spring wheat, now facing some of it’s own weather issues, was up AUD$7.20/t compared to yesterdays conversion. Argentine wheat, and sorghum, I’ll talk about the later in a minute, but wheat was up roughly AUD$13.79/t. I find Argie wheat interesting, I imagine the Argie farmer would be ecstatic. Coming off the back of a record crop, holding wheat back because the US had the markets nailed down to non profitable values. Only to see this rally right at sowing. It’s not like Argentina is dry either, it’s not, if anything it’s too wet, but keep in mind their sowing window is similar to our own. Thus too wet now means plenty of subsoil moisture once the crop is in the ground, and the forecast is for some drier weather ahead. Argie milling wheat is US$6.00 higher C&F Asia than US, and get this, Aussie H2 C&F Asia is only US$13.00 higher than US. Black Sea now cheapest by a mile for Asia.