Wheat futures at Chicago triggered some technical buy signals overnight, closing above both the 5 & 10 day moving average. The punters are comparing the recent trend higher in wheat values there to the move we saw at the beginning of April. I tend to think that the move at the beginning of April may of had some more fundamental back bone to it, but speculation is speculation, I guess, it is a “futures” market after all.
Either way the April rally was quickly sold off to a new contract low. A prospect more than feasible given that a similar turn in the July contract would occur leading into the US harvest. Then we have the corn / wheat spread punters. The July corn / wheat spread is 92c/bu, that’s a hell of a lot wider than the May spread was as it neared expiry. It’s hard to see that closing on the back of corn moving higher given the turn in the weather across the US corn belt. Much of Iowa and Illinois are forecast to see falls of 25mm to 125mm over the next week. We may see a short term spike if there are some planting delays, but we all know you can make more money out of mud than dust. The past tells me that a wet sowing isn’t a bad thing in the US.
The other side of the coin is the actual market, the one the rest of the world competes in. Is there any fundamental strength being applied to this market from the rest of the world. Europe and China are the two factors to consider. Europe more so from a supply perspective, as France in particular is expected to return to the world export arena more strongly than it was after the terrible production issues of 2024. The weather in France, and to a lesser extent, Germany and Poland, has been less than ideal. Northern France has been dry but some showers are expected to push through this week. Possibly too little too late. The 14 day precipitation anomaly shows that much of N.France has seen less than 20% of average rainfall, the 30 day anomaly chart isn’t much better. West Germany can be bundled into that statement too.
Then there is China, heat and dry across Henan province over the last month has pruned wheat yields there. The data tends to indicate that France is in worse shape than China though. Rainfall over the last couple of weeks across Henan has been 20mm – 50mm, right at grain fill, still hot though.