Chicago wheat futures gave back much of the previous sessions gains last night. With the funds holding a net short position they are a little exposed to a rally during the northern hemisphere thaw period. If we do run into a problem in the US, or even Russia or Europe, it could see a quick rally, thus it’s not unusual for funds to try and square up a little during the end of Q1.
There’s also the normal strategy of using food based commodities, like wheat, as a hedge against inflation. The market doesn’t have that feel or urgency about it this time around, but wheat is terribly cheap and may respond to demand signals much quicker than one might expect. Again, without a fundamental back up to these technical drivers, there is little hope of a sustained rally as long as the global stocks to use ratio remains above 30%, currently 33.7%.

US corn export sales continue to be exceptional, nearing 61mt. This is the largest volume of US corn export sales put on for this period in their marketing year this century. To make it all the more impressive, it does not include a single sale to China. Corn is worth roughly US$218.50 FOB NOLA. Compare this to something like Aussie SFW1 at US$265 FOB Newcastle and you can see what’s going on. Even stacked up against S.American corn US$216 FOB, US corn is cheap given the proximity to its end users.
The same can’t be said for US soybeans though. This has many analyst on the defensive when it comes to talking US soybean values higher than they already are. With US soybeans at US$460 FOB NOLA versus C&F China at US$472 from Brazil, it’s easy to see why any rally in CBOT beans is being viewed with a raised eye brow.
Both rapeseed and canola futures were a little weaker overnight. Paris rapeseed shed E2.75/t in the May slot. The AUD wasn’t able to counter the move and we see the day to day conversion comparison shed AUD$2.15/t. Paris Feb27 rapeseed was -E3.50/t, possibly signalling softening new bids crop here Monday.