US futures continue to hand back value, hard red wheat shedding 21c/bu (AUD$10.69/t) overnight. Many punters may argue that this is against the majority of fundamental signals, and that’s hard to deny. There are few that can stand in the way of fund manager with a sell order and greener fields to plunder on the horizon though. That being said the flow of money is tracking a known historical trend for US wheat futures that often hit their highs in May.
The question is, will this year be different. The fact that 70% of the US winter wheat area is now in drought should probably be rating more of a mention as a major support point as the US futures market crumbles away than it is.
Recent short term rainfall               predictions for the hard red winter wheat belt, particularly Kansas, the Panhandle and much or Nebraska, remains dry. The reversal of the inflation hedge (or short covering ) the funds initiated back in February may just be the short term buying opportunity, a dip in US values, the consumers needs to see prior to a fundamental signal to world balance sheets once the harvesters in the US crank up in June / July.

Rainfall across parts of NSW were welcome, but there are far more dry patches than wet patches. Those sowing winter crops are doing so in less than perfect conditions, often into top soil moisture that does not join up to sub soil moisture, where subsoil moisture is even available. Not ideal. These fields will need further falls in no more than 2-3 weeks to keep seedlings alive. As for the percentage of the NSW wheat belt that will be sown, that number decreases dramatically west of the Newell Highway, where the big acres are sown. This is most evident west of Narrabri to the QLD border, prime wheat country.

The short term key is Russian values into the Asian market. Overnight both Ukraine and Russian wheat conversions were a little stronger, up about an AUD/t while the US day to day conversion comparison was weaker by about AUD$6.00 to AUD$8.00/t for milling wheat out of the PNW, still dearer than Black Sea.