US wheat futures pushed lower. There doesn’t appear to be enough punters happy to stand in front of a fund manager with a sell order and argue about fundamental support just yet. Will talk of higher interest rates in the US bring buyers back to grains, the traditional hedge against inflation, or will the stronger USD continue to signal weaker futures.
This makes me wonder where the AUD might head during the second half of the year and into next year. I’m no currency analyst, but what happens to the AUD has a big impact on wheat so you need to have a view.
The Aussie economy is in the toilet. The RBA managed to find rising fuel prices enough of a threat to inflation that they failed to notice the rest of the data, you know, record foreclosures, record debt delinquency, crashing house auction clearances. Just the usual indicators that the average Joe and the normal every day punters are hemorrhaging due to the higher cost of inputs and changing laws. I’m wondering what other forms of manufactured inflation the world can come up with in order to kick the can down the road and inflate a bit more of these debts away. They must be starting to run out of ideas.
This leads me to wonder what happens when the can can’t logically be kicked much further. Does reality kick in, does the AUD just collapse as rates here move lower against the flow in US rates, is this possible. I’m asking myself that question a lot lately, is this possible. With that look on my face, you know the look, the one when you watch TV for the first time in years and just look at it like you are staring at a make believe satire show, but it’s not, it’s real…….
Anyway, over a 12 month period the AUD often trades a 10c range. If we are currently towards the higher end of that range then we may well see the AUD closer to 60c than 80c over the long term. 10c in the AUD is currently worth about AUD$55.00 per tonne, combine that with a rally in US futures for some reason, I don’t know, maybe a greatly reduced HRWW crop, maybe a smaller than expected EU crop, maybe lower sown acres in Russia, or maybe too much rain in China, you know, a bullish scenario that’s plausible… and we may just have a chance.