The premium wheat’s in the US found the most support after the US spring wheat crop condition rating fell more than expected. Combine that news with the lower yields in wheat for France, Germany, Poland and much of western Europe, with the deteriorating political environment between Ukraine and Russia and we start to see more short term bullish news than bearish news.
The phrase “taking the stairs higher, and the elevator lower” basically sums up the movements in wheat futures at present. A mean +AUD$45.00 in a few weeks isn’t a bad stair step higher, but it’s been a rally that has only seen the Dec futures contract for SRWW jump more than 10c/bu higher in four sessions since the beginning of the month and of 4 of those days the adjacent sessions had basically voided the prior sessions move, once down, once up.
It’s these kind of rallies that creep up on us, take us by surprise when they finally come unstuck and collapse, taking the elevator down. Currently this rally is “only” +13.25% higher in 15 sessions. The volatility is there, but it’s still growing. It will need more bullish data to persist. The best part about this rally in US wheat futures is that it comes in the middle of the US harvest. A time usually associated with lower prices.

The heatwave in Europe has pruned yields in Germany by roughly 10%. The French wheat crop, although impacted by the heat, was generally mature enough that it simply hastened harvest. Yields were already declining in France due to a drier than average spring.
The heat although not exacerbating these yield losses in wheat has, in some cases, decimated spring sown grains like corn. How this plays out from a feed demand perspective for Europe in the mid term is yet to be determined. Overnight Paris milling wheat futures took a breather, shedding €1.25/t in the December slot. This was against the trend higher for US futures, and also a number of other exporters FOB cash values. Both Russian and Ukraine FOB wheat offers increased. Argentine milling wheat values improved roughly AUD$7.00 / tonne for the new crop day to day.