US and European wheat futures ended moderately higher, driven by positioning ahead of the USDA’s report (following another build in funds’ short position last week) and as the rally in crude futures shows no sign of ending. Geopolitical concerns in Saudi Arabia, coupled with falling US crude/gas inventories, has pushed spot WTI crude to $57.30. A further rally in crude will be watched closely, and could have supportive market implications.
US winter wheat GD/EX ratings increased 2 points to 55%, and are now on par with the longer term average. Conditions rose substantially in MT, NE and TX, and were up 4 points in KS, but others states were little changed.
Currencies in Russia, Australia, Canada and South America strengthened further today, and through the Russian ruble’s reaction to crude’s rally so far has been muted, ARC highlights the strong correlation between currencies in Russia, Canada, North Africa & the Mid-East and energy prices longer term. Crude’s collapse triggered the recent expansion in global cropped acreage (via weak major exporter currencies), and so crude’s potential will be incredibly important longer term. Both the bulls & bears will struggle for leverage, but we’re increasingly interested in using breaks to extent wheat/flour coverage on behalf of end users.
