More of the trade has centered their Russian production estimate at 80 MMTs, which is massive, but ARC has detailed in recent days that Russia’s infrastructure will exports of only 29-30 MMTs, and anyway losses in the US far outweigh those seen elsewhere in the world. Interior Russian cash prices are down only slightly from July 1, CME futures are down 14%, and Gulf HRW is now offered at $5/MT discount to Russian and hefty $13/MT discount to comparable EU origin. US wheat is cheap, and technically the market is now heavily oversold.
Like a year ago, rallies will be somewhat muted as steep competition for world market share continues, but rarely has US wheat been offered below Black Sea/EU origin in August. Expect steady boosts in weekly export sales into early August.
We also mention that precip in India in August looks to rest at 25-50% of normal, raising questions of water availability next spring.
Forming a lasting bottom will be a process, but it makes fundamental sense to await an autumn recovery before extending sales. Managed funds are short an estimated 40,000 contracts in Chicago.