US wheat futures continued down the path of least resistance last night, all three major grades closed lower. Cash values out of the Pacific Northwest were also lower, HRWW and Club White wheat out of the PNW now the same price. Not a great thing to see when one would expect to see WW trading at a constant $25 premium to HRWW. You may expect to see this trigger some bargain hunting for white wheat from the demand side in the short term.
Chicago soybean futures we hit hard again with double digit losses across nearby and new crop slots. The bearish move in beans spilled across to both rapeseed futures at Paris and canola futures at Winnipeg. Winnipeg falling further and keeping the prospects of further exports to the EU very much alive.

If the EU continues to be a benchmark market for Australian canola we will need to be competitive with Canadian product in both price and quality. Currently we see the Canadian values convert back to an equivalent ex farm LPP price of something close to AUD$620 – AUD$640 per tonne, new crop bids to the producer are coming in at AUD$702 here, so there may be some serious basis erosion in the mid term unless we see some upside in Canadian values. Considering that we are moving closer to the Canadian harvest this might be a big call, not impossible though.
French values for rapeseed are still OK, hence Canadian imports. If we were to convert French values back to Aussie values ex farm basis using China as a consumer they are equal to something close to AUD$790ish. This is a mute equation though as the EU is more likely to be an importer than an exporter. At the French crusher there is little difference in price between French and Canadian canola, so our benchmark, unfortunately, is most likely to be Canadian values.

There’s a WASDE out on Friday night our time. The punters are predicting increases in US wheat, from both the June report and year on year, for all grades bar soft red winter wheat year on year. Hence we see the managed money continuing to increases their short position both in the US and Paris wheat pits.