Wheat futures failed to capitalize on Thursday’s technical performance, but neither did the market collapse. How Dec CME performs around $4.50 early next week will be important to very short term direction. Otherwise prevailing themes are intact, with world markets rising again, albeit modestly. Funds on Tuesday were short a net 80,000 contracts, down 4,000 from the week before and compared to 127,000 on this week a year ago.
Domestic prices in Russia were mixed, and weaker again in the Volga region. But prices in S Russia, from where exports are sourced, rallied for the first time in six weeks to $155/Mt, basis spot. Russian exporter margins have widened in recent weeks, but stability in the domestic market will prevent fob offers from collapsing. And fob offer this evening are up another $.50/MT.
Spotty showers will impact E Australia next week, but a meaningful pattern change is not indicated – and much, much more rainfall is needed to reverse the trend in soil moisture. ARC sources in Australia are getting concerned.
We maintain that a lasting bullish trend requires severely adverse weather, but a test of $4.80, Dec CME, is probable without soaking rainfall in Australia by mid-October.
