US wheat futures recovered all of Thursday’s losses, amid limited news. World cash prices are steady (not weaker), and unlike corn and soybeans USDA data on Friday is likely to be supportive. US wheat exports may be reduced, but also winter wheat acreage should be even closer to the all-time low of 1909, which places more burden on spring rainfall across the Plains and S Midwest.
ARC maintains a neutral outlook, but in the near term close attention will be paid to European fob prices – French in particular. EU wheat exports through the end of Dec rest at 11 MMTs, down 2.5 from a year ago while the USDA forecasts EU exports to rise in 17/18. Another round of European farmer selling is due in February, and thereafter French prices may become more competitive with the Black Sea. US exports disappiont.
Still, it’s apparent that Russia is finding ample demand at $190-192/MT, basis fob. Egypt bought two cargoes of Russian origin at $192-193 this AM. This implies real fundemental support will persist below $4.20, basis spot CME. Fair value is pegged between $4.20-4.50 into spring.