The main driver in US wheat futures continues to be the lack of supply from Russia and Ukraine. Over night there were analyst reports that stated that if the fighting continued through to at least the end of the year, and current port and shipping issues continued, it could mean that around 15mt of wheat would need to be found from alternative exporters.
One would expect this may have come from the likes of Europe, and a portion of it probably will, but we need to keep in mind that Europe had its own production issues this year, and the drought there lingers on in France and Spain. Exports from Europe may be limited. The other Black Sea states, Romania and Bulgaria, have increased exports of both their domestic crop, and as much Ukraine wheat as they can, but logistics are being pushed to the limit and there are reports of around 70 vessels waiting to load at Constanta, or access loading on the Danube.
This is another issue again, low water levels in the Danube are also creating navigation problem, slowing access to grain. Up country rail to elevator capacity is also full, not being able to unload into the number of boats as quick as it should be able to.
The punters at Chicago see a good portion of this “15mt” of wheat potentially coming from the USA, hence the run up in futures. The rally was initially lead by Romanian values a couple of weeks ago. Romanian wheat is currently valued at US$286.25 FOB Black Sea for Dec > Feb. On the back of an envelope this would roll out to a C&F Asian consumer port price of something close to US$298. Although this is US$20 to US$30 higher than what Russian or Ukraine wheat would have been, it is still much cheaper than milling wheat out of the USA, Argentina or Australia would be. The main question here is how much of the average 6mt +/- exportable tonnage of wheat out of Romania is already allocated.
This does tend to point to the USA filling the gap until the Southern Hemisphere crop comes online in November. Hence the current US$17.00 spread between Aussie and US wheat on a C&F Asian port basis, Aussie being cheaper. But US wheat is much, much higher than Romanian, but comparable to French.