The dust is still falling post the USDA hand grenade as the global trade try and form an opinion from the data. One of the big movers today was the Kansas v Chicago spread which plumbed a new low close to -90usc/bu. My simple view of the US delivery market makes me think this should attract another swath of HRW into the Chicago network and, cattle would be changing diets from corn to wheat – but clearly I’m wrong. This new leg lower was built on ideas that there could actually be more HRW acres than first thought based on the FSA data. On the flip side the SRW balance sheet is still at risk of tightening further – remembering that, despite Chicago getting most of the traded volume, the actual SRW balance sheet is pretty small and can go from feast to famine pretty quickly. As mentioned yesterday – Australian values are more focused on what the Russian cash market does vs the fun and games in Chicago. With ideas that the Russian wheat balance sheet needs to tighten further the black sea reaction to the carnage in the US was extremely important to Australian new crop values. The Jan 2020 contract hasn’t really moved that much at all – current values around US$193/t fob equates roughly to a $240/t cnf Philippines – pretty much parity to where we would sell it from WA.

Back locally in Australia markets was softer on the back of offshore markets however in the new crop wheat markets we saw bids pulling back A$8-10/t and offer side slightly softer to unchanged. Weather is still the focus in this market now as all eyes are on what happens for the remainder of August. We continue to see 10-15mm forecast on the 8-day for the WA crop, and on the opposite side of Australia the feed demand through the north remains strong interest as forecast continues the dry trend.