US futures market had a volatile session, driven by the expectation, then the reality of the GASC Egyptian wheat tender. On paper most had the US SRW as being the most competitive origin provided a) Cargill offered (they have been the only participant from the US lately) and b) values stayed relatively inline with US basis markets. When the offers were published the futures market shed 4c/bu on the realisation that Cargill had increased the “GASC premium” – maybe in response to the recent rejection of a French vessel by the Egyptians. These tenders are extremely important to the global market and to US futures. They provide the most transparent indication of who has the cheapest wheat which in turn will drive the trade flows. Unfortunately it’s not that simple. Payment terms (180 days) and receival standards make this a difficult destination for traders but one vital for international trade. In the end the futures markets managed to claw their way back and post a positive close with Chicago closing up 4c/bu to 464 ½, KC closed up 3.75c/bu to 434.75c/bu while Minny softened by 2c/bu to close at 531.25c/bu.

The Commitment of Traders report was largely in line with price moves over the reporting window with the exception of Hard Red Spring wheat. Remembering that HRS is a small contract the spec sold just under 6,000 contracts which is historically a large move. This puts the spec short prior to the planting window in the US – interesting this year given the widely publicised excess moisture and the potential for sizeable planting delays. However, the spec is short SRW, record short HRW and is now historically stretched to the short side in HRS. Additionally the spec is historically short corn and soybeans – as I always stress – just because they are short, doesn’t mean they have to get out in a hurry. Their position could ultimately be the right one but is does carry the risk of a seasonal issue in the upcoming planting/growing season.

Locally rainfall remains scant through the entire east coast wheat belt. Some decent falls for the week in the far northern WA belt, and the eastern belt yesterday, but it looks like the main front will slip under most of the east coast as it moves across. Plenty of planting activity going on however with calendar sowing allowing many growers to still maintain crop mixes. We are watching canola acres closely as this season progresses given the relative tightness of the east coast balance sheet.