7/3/24 Prices
| Technically May wheat could see further selling in the lead up to this weeks USDA report. Fundamentally this months WASDE report is expected to be benign. This time of year most old crop production is well known and the market is relying on demand to drive prices. With the international price continuing to slip away there is no need for demand to step up in a big way. So far every time a buyer has picked wheat up it’s been cheaper than their previous purchases and the likes of Russia appear unlikely to limit exports in order to push prices higher. This will mean that any short to mid term price changes will have to come from the supply side. We usually see volatility associated with the supply side during the northern hemisphere winter thaw period of March / April and possibly a late cold snap in May. I remember the 1996 ANZAC day frost in Kansas spiking the market nicely. Chicago wheat futures then rallied from about 480c/bu to 716c/bu over the course of about 3 weeks. Algeria picked up 870kt of wheat for June arrival. Prices were reported to be around US$227.75 to US$228 C&F. It was an optional origin sale but prices this low tend to indicate the lions share will come from the Black Sea, most likely Russian. The price is some US$38 cheaper than Algeria’s last purchase in mid January. All tonnage and values for Algerian business are best trade estimates only, Algeria does not make their tender results public. For Aussie wheat to compete into this sale XF prices would need to be in the vicinity of AUD$200 XF. Something no one wants to see. The international wheat market is now 100% detached from the Ukraine / Russian war. An example is the Russian missile attack just 500m away from where Zelenskyy was meeting with the Greek Prime Minister in Odessa. Greece is a NATO member. Two years ago that would have been worth at least 200c/bu at Chicago. The driving force in wheat futures, apart from the fund managers apparent hatred of it, is the stocks report, which the punters see higher Friday. |
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