Wheat futures ended mixed, with winter contracts losing 4-7 cents and spring wheat adding premium amid further declines in crop potential – and as dryness intensifies across the Canadian Prairies and Northern US Plains. Managed funds as of last Tuesday has established a record net long position worth 73,000 contracts in KC wheat, which has been partially liquidated in recent days as harvest rolls along.
US spring wheat crop conditions fell to 34% GD/EX, vs. 35% a week ago, and we mention poor/very poor ratings in SD and ND now rest at 74% and 40%, respectively. NASS is not yet finished with lowering US HRS production.
World cash markets are a bit weaker today amid strength in the euro and similar profit taking in EU futures. Russian crop estimates are being raised, with some in the trade as high as 73+ MMTs. Russian weather has indeed been favorable, but amid VAT rebate and logistical issues, ARC doubts Russian exports can exceed 27-28 MMTs of wheat, unchanged from last year and vs the USDA’s projected 30.5 MMTs. Major changes to the world wheat trade matrix lies ahead.
There’s just not a lot of rain offered to Southern Canada or Australia in the next two weeks, and Sep CME is undervalued below $5.00. We are buyers of any break.