Another volatile night on the US futures market, this time the markets finished lower. It seems 10c/bu variations are the new “flat market”.
I was talking to a trader in Melbourne yesterday, trying to get a decent APH bid as they had dropped their price $4 form the previous day. When I asked why, they stated currency was the major issues, conveniently forgetting that futures had moved up 19.5c/bu ($AUD$9.20/t) overnight. I remember when a move like this would have resulted in a jump in local prices and an opportunity for farmers.
Every year the US, and local futures market, seems to have less and less of a correlation to local prices. The big questions are, is this because it has become less relevant, not reflective of actual grain values globally, or is it simply less attractive to pass on that variation.
I see many traders happy to lower bids on the back of weaker futures but I don’t see too many following that same market higher dollar for dollar when it turns around. The futures market simply appears to be a tool to help erode basis, just look at canola.

The decline in US winter wheat ratings were responsible for much of the previous sessions gains. Agronomists are starting to get a feel for the level of winter kill from the big freeze a couple of weeks ago. Last night’s downside was thanks to a better weather map in the US, predicting some much needed rain for places like Kansas. A quick look at World Ag Weather and the map doesn’t exactly show that this morning. In fact the map predicts 20-30mm of rain across much of Oklahoma and nothing in the week ahead for Kansas. Technically Chicago May SRWW is neutral, maybe even a little oversold after last night. Look for further volatility over the next 7 days.