US wheat futures continued on the path of least resistance overnight, lower. All three US wheat grades shed value, soft red winter wheat leading the race to the bottom.
The move when reflected in AUD / tonne, and compared to yesterdays conversions, is helped a little by the weaker AUD. We should also consider the fall in SRWW futures at Chicago reflects a decline of around AUD$8.12/t using spot currency, but we see the day to day conversion comparison for cash export HRWW out of the US Pacific Northwest is only down around -AUD$2.58/t.
The important thing to recognise with this decline in US cash wheat values is that US HRWW is now roughly US$1.00/t lower C&F Asian consumer than what Russian wheat is. Making US wheat the cheapest into that part of the world yet again. I imagine much to the disgrace of the US HRWW producer. Hard red winter wheat futures closed showing a nearby value of 617.75c/bu, and a March 2027 value of 662.75c/bu, a carry of 45c/bu for 6 months 7.5c/bu/mth (AUD$3.84/t/mth). I find this a little interesting considering the poor state of the US HRWW crop.
If the lower US price does result in increased US business into the Asian market it should tighten up local supply as we move into 2027. The main factor then will become if the US east coast consumers of HRWW can bring in cheaper wheat from Europe than they can find locally. Currently we see French wheat valued at roughly US$234 FOB France. That’d land on the east coast of the US for something close to US$260/t C&F. That’s probably only US$15 – US$20 more than what it’s costing to bring Midwest wheat across. US FOB offers out of the US PNW are only US$244/t. Rail rates from Kansas to New York, according to Google, are about 4c/t/mile or US$56/t to New York, so that adds up. Cash HRWW central Kansas is roughly 550c/bu US$190 XF. It’s 2200km from central Kansas to a New York flour mill. I’m no expert on internal logistics in the US, but in Australia it’d cost a lot more than US$70 to cart wheat by road over 2200km, but the numbers work using US rail according to Google.