Good rallies are often followed by a little profit taking in the following session. Wheat may have succumb to this last night, Chicago futures shedding around AUD$5.00 per tonne. HRWW out of the PNW FOB cash values did not follow futures lower, instead gained AUD$4.00+.
If we were to dig for some fundamental news to assist the reasoning for the decline we might turn towards the results for the US spring wheat crop tour which concluded yesterday. After sampling 108 on the second day the weighted average for spring wheat for the day came in at 48.1bu/ac, or for those living in the digital age, that’s roughly 3.23t/ha. This is up a little on last years day 2nd day results, that came in with a weighted average of 3.1t/ha.
The second days sampling was better than Tuesdays results. The southern parts of N.Dakota are doing it a little tougher than central and north west N.Dakota. The tour concluded yesterday with day three results coming in at 48bu/ac (3.228t/ha) over 238 field inspections. Durum fields came in just a bees dick better than the spring wheat estimate at 48.2bu/ac. The net result was a slight decline on the weighted average for last year, 2025 = 48.3bu/ac, 2026=48bu/ac. This is probably a little better than some punters had been expecting to see. The take home message is that these estimates are well below the current USDA estimate that was released earlier in the month. At 58bu/ac (3.9t/ha) the current USDA estimate is 20% higher than the crop tour results, depending on who you want to believe, this is possibly signalling a further decline in quality wheat supplies from the US over time.
If you want to stay bullish new crop wheat there’s plenty to argue with grain traders about. We are not likely to see the lofty highs seen at the start of the Black Sea war back in 2022, but the longer the Russian and Ukraine Black Sea ports remain hobbled the tighter supply is getting…… in the short term.
It’s interesting to watch from a possible grain traders perspective. Ports close, domestic prices fall, wheat futures go up. Wheat futures were already killing any long term shorts after the US and Europe both started reducing supply estimates, and then Ukraine starting bombing anything that floats. It’s a dream hedge, buy cheap local wheat, or not, just buy futures, as soon as they open ports sell futures and buy wheat locally…. too simple to work probably.