July CME wheat rallied 10 cents, with slightly better gains noted at other exchanges. Crude oil also rallied sharply, thereby supporting currencies in Russia, Canada and Australia, and the US market remains very competitive for early summer export demand. ARC also mentions that managed funds through Tuesday increased their net short Chicago wheat position to 121,000 contracts, up 13,000 on the previous week and compared to a net short of just 73,000 contracts a year ago.
Russian domestic wheat prices this week are unchanged in ruble terms, but up slightly in US dollar terms. Russian fob offers have rallied slightly following Egypt’s surprising tender results, and the US Gulf market maintains its status of the world’s low cost seller up to $4.50, basis July KC. And even then, only Russia offers any real competition, and so higher protein wheat values are viewed as cheap even following today’s rally.
ARC’s climate work includes the risk of a hot/dry summer across E Europe and Russia, and while the pattern there will stay cool/wet in the near term, no new sales are advised. A further slide in the US dollar could spark additional fund short covering in commodities.