Wheat futures recaptured all of Tuesday’s losses, and while it was another session lacking wheat-specific news there certainly any new bearish input. EU cash prices are a bit weaker this week as stocks there build and the need to find export demand is getting a bit more urgent. Otherwise, world wheat prices are firm.
In the background remains changing world currency relationships, particularly in Canada & Australia as the value of crude increases. The graphic at left shows the correlation between crude and commodity-based currencies, and until there are signs of rising US energy inventories ARC looks for further currency strength outside the US. Recall stronger currencies elsewhere curtail acreage expansion.
Increasingly it also appears that a shift to wetter weather in the US awaits the end of La Nina. Without improved soil moisture in Feb, winter wheat abandonment forecasts will begin to rise.
Rallies above $4.45, March CME require a more intense catalyst, but we advise against turning bearish at what appears to be an intermediate low.
