US wheat futures closed higher, not eroding week on week losses but taking back a slice of the previous sessions loss. Hard red wheat fared best, as one might expect to see given the weather outlook for US states like Texas, Oklahoma, and Kansas.
The HRW contract is interesting to NNSW producers. It is a very similar type of wheat grade as to what is normally grown in NNSW. Although a red wheat, protein is usually in a similar range as to what we produce in white wheat here across the NWSP.
Is it safe to assume then that moves in US HRW futures should be reflected in local H2 bids. Probably yes, to some degree, but remember they are two very separate markets. If currency was flat, weather was benign and both the US and Australia were producing an average crop in a non-election year and Asian markets were having no supply, demand and currency issues and no political issues, then yes, it’s probably safe to assume a closer correlation……but does this ever happen…….. well…….maybe …………. yeah na, not often. Hence we’ve seen in recent years some huge variations in what one may have called a traditional basis only 5 or 10 years ago.
Hard red wheat futures rallied 22.75c/bu (AUD$12.70/t) in the Dec 23 contract last night after shedding 21c/bu in the previous session. The big question regarding commodity futures these days is how much of the money changing hands is actually ” wheat” related. Are the funds just selling stocks and looking for somewhere opportunistic to ” park” some money until after the Monday morning brief. Is the move simply the result of some buy orders being triggered by a punter picking dips. Is it just an algorithm bot, punting a techies “pocket money”. Being a fundamental trader, as a producer is, is not as black and white as it once was. 10 years ago, I thought the futures market reflected less on grain prices than it should, this has only become more obvious as time went on. World cash sale reports are what we need to follow, and there lies or lye’s, the issue of transparency.