US wheat futures ended mostly flat ahead of tomorrow’s WASDE report – in which HRS and major exporter balance sheet will be most interest – but ARC notes that world cash markets continue to rally and that N Hemisphere weather patterns are little changed – and remains highly adverse in the US, Canada and Australia.
The graphic below shows updated world cash offers for spot and September delivery. US wheat is the world’s most expensive, but other markets are following and even Russian prices are sharply higher this week amid ongoing VAT rebate issues and a much slower than expected harvest. Russian farmers as of this week have gathered an estimated 5.7 MMTs of wheat, down 40% from the same week a year ago. N Europe and parts of Central Russia will be rather wet over the next 7 days, and following severe yield loss in N America, the quality of wheat in the EU & Black Sea will be watched closely. The world cannot afford much more quality loss.
ARC maintains an upside target of $6.00 basis Sep CME, and our work suggests there’s potential for major exporter production to be the lowest since 2013. Its still early to be overly bearish.
