US wheat futures rallied 4-7 cents, with Dec CME posting newer multi-week highs. Limited fresh news is available, but Australia’s crop potential continues to decline and the Black Sea cash market continues to move higher (record demand is found here). The graphic below makes clear the trend in global prices since early summer, and also highlights how Australia’s share of world trade is in retreat – which will bode well for the market US over time.
Literally zero rain has fallen across much of New South Wales, Queensland and even pockets of W Australia so far in September. Spotty showers are possible in NSW next week, but needed soaking rain is not indicated over the next two weeks, and a final Aussie crop of 19-20 MMTs (vs. the USDA’s 22.5) is most likely.
US export sales on Thursday are expected in an uneventful range of 300-450,000 MTs, but we maintain that the USDA is too low with its forecast. Gulf wheat is only more expensive than Russian origin, and Black Sea prices are expected to inch higher into Nov/Dec. Also note that managed funds this evening in Chicago are net short an estimated 86,000 contracts. The next upside price target rests at $4.70 Dec Chicago.
