It’s almost like a Chicago wheat trader woke up yesterday, re-read the WASDE report and thought, “gosh, Bob, that USDA report is bearish wheat”. So the selling resumed.
Is it a bear trap, possibly, but I can’t see how. This is the deal of the century for the major importers. As much as they may be squealing like a stuck pig while pointing at Black Sea value and saying, I want wheat that cheap. The chance that they will get the opportunity to buy Russian or Ukraine wheat at the current indicated FOB value from the ports those values are indicated at, is probably pretty remote. If a Black Sea corridor is opened, and the deal is trusted, those traders that have bought wheat in Ukraine and Russia over the last few months won’t be giving it away.
For instance, US milling wheat C&F Asian consumer is something like US$288. Black Sea equivalent is closer to US$255. The question becomes, will US values fall the US$33 to compete with Black Sea values, or will Black Sea FOB values improve and be offered at a few dollars under current US values. This might be where Black Sea political intervention is needed, but will it be implemented. Currently the major importers are buying cheap wheat, could it be cheaper, yeah sure, but will world production decrease if wheat values fall lower, most likely yes. Bad prices tend to fix bad prices.
The above scenario tends to indicate two plausible outcomes. US values fall US$30-40 on the back of deal, or Black Sea values increase on the back of a deal. This is a supply and demand equation. If Black Sea wheat see’s high demand, as you would expect, it should increase in value. In the meantime we continue to watch the USA in a race to the bottom ……against themselves.

In other news, China is urging the US to cut tariffs as agreed in the US$30Bn / US$30Bn trade arrangement. Sometimes politics just looks like two kids arguing in the park. Not as bad as the two kids at the Black Sea park I guess, at least they aren’t throwing stones at each other. Abu-Dhabi peace talks appear failed.