US wheat futures followed corn to modest losses, and through the session fresh news was lacking. However, after the close ABARES in its Dec report lowered its Aussie crop estimate to 20.6 MMTs, vs. 21.6 previously, and ARC’s contacts fear additional losses amid heavy weekend rain/wind in E Australia. Hi-pro cash markets also continue to rally on eroding exportable surpluses in N Europe.
Assuming ABARES latest estimate, ARC calculates Australia’s exportable surplus at no more than 16.5 MMTs, and is likely closer to 15.0-16.0. This is down 6.5-7.0 MMTs from last year, and ABARES predicts Aussie domestic use will be a record 8.2 MMTs in 17/18. A sub-20 MMT crop is possible by the final count.
Cash prices in N Europe hit 10-week highs today as available surpluses are drawn down. Interior HRW basis continues to strengthen, and so any further weakness in futures does not look to be led by the cash market. No sales are advised below $4.50, basis March CME. We are bulls on breaks.