CME futures settled marginally lower, while contracts in KC and Minneapolis fell 7-30 cents on continued fund liquidation. Funds’ net long has hung over the market in recent weeks, and in KC and Minn, funds are still net long. Managed funds in Chicago, however, are net short 12,000 contracts, which will act to slow the recent correction.
Interior Russian prices have fallen sharply across the Volga Region but, interestingly, have been steady to higher in Southern Russia – in spite of a record crop. Note that a majority of winter wheat is produced in S Russia, and a majority of exports originate there. So far, cash markets in Russia have followed normal seasonal trends, which suggest a lasting bottom is imminent.
Gulf HRW is the world’s cheapest quality origin, and its discount to wheat in the Black Sea and Europe continues to widen. It’s been a rather steep correction, but seasonal weakness is close to ending.
Ample opportunities for US wheat export demand lies ahead, and we advise patience with respect to pricing additional bushels. US spring wheat production should drop another 25-35 Mil Bu on abandonment.