Technical positioning ahead of the WASDE report due out tonight dominated trade in the US markets. Traditionally the November WASDE is a bit of a nothing report and is not remembered for influencing the market. 2022 is not a year to be taken lightly though is it, so the punters were keen to remove a little risk and take some profit off the table just in case.
The fundamentalist will tell you wheat was weaker due to a slight improvement in the condition rating of the US winter wheat crop. Yes, recent rain would have benefited some regions greatly but a condition rating of just 30% G/E is nothing to write home about. The Poor to Very Poor portion of the rating did improve 1% too, now at just 34% P/VP. HRWW giant Kansas has a G/E rating of just 26% going into the winter, Texas 14%, Oklahoma 14%. These three states produce over 1/3rd of the US wheat crop. A 30% reduction in these three states would be the equivalent of wiping out …… say half of the east Australian wheat crop……… do you like that comparison, a pretty timely reminder to the punters who are bearish world wheat.

Chicago corn and soybean futures took a hit last night, both grains expected to feel the impact of reduced demand from China thanks to their zero Covid policy. Harvest of both soybeans and corn in the states progressed well for the week, now both ahead of the average pace.
Chicago wheat remains stuck in no man’s land, pulled between the continuation, or not, of exports out of Ukraine once the grain corridor deal expires, or not. And the poor start to the winter wheat program in the USA and flooding across many parts of Australia. To add a little more misery to what is unfolding in Australia, there are now multiple reports of hail and weather damage across parts of the WA wheat fields as well.
Egypt pulled their wheat tender in the end, big call given the current developments, but they do have 5 months’ worth of stock, or so they say.