US wheat closed mostly firmer, canola markets down by a fraction; Monday’s settlements as follows.

Markets gave up yesterday amid reports of rain through the dryer parts of the EU and Black Sea region. This also coincided with private analyst SovEcon  upping the Russia crop from 80 million tonnes (Mt) to 83.4Mt. So with wheat export inspections coming in around the trade guess there was little for the bulls to get excited about. Crop conditions were also benign for wheat with the recent trend of good HRW and less than ideal SRW continued. The only real excitement was the lack of planting in both corn and spring wheat – both only added 1 per cent (pc) to last week’s initial numbers. This will be watched closely with more storms forecast through the problem areas over the next week.

Ticking off the big three in the market at the moment, the fund short, US/China relations and ASF impact. Fund short is big and getting bigger with every update. If we combined spring wheat, corn and beans being all the commodities still to be planted in the US, the spec is historically record short for this time of year; an interesting time to stretch with all the risk in front of us, however nothing new here. It will be interesting over the next few weeks as to how the funds rationalise a slow planting pace in their models, understanding a percentage of the funds have a very systems-based trading strategy. US/China relations – the rollercoaster of positive versus negative reports continue with Mnuchin mentioning that US and China are nearing the completion. We have seen this before and it feels like the market needs something more than good vibes. ASF – this story just keeps getting worse. Unconfirmed reports of up to 45pc of Chinese sows being affected and destroyed are common. This would represent a little under a quarter of the global sow herd so the subsequent impact to feed demand is unquestionably meaningful.

Locally the weather models continue to diverge. Rainfall for northern Victoria through southern NSW has largely evaporated. The BOM is not seeing any meaningful rainfall now for the entire belt for the next 8 days which is starting to force new crop basis higher, albeit reluctantly. There is still ample time for planting cereals so the market is trying to balance the need to restock the shelves on the east coast vs demand erosion/competition from the northern hemisphere. Old crop is even more confusing with WA wheat pricing into both Indonesia and the Philippines on paper. The reality for Indonesia at least is the demand may already be spoken for. The one certainty is the global consumer is holding their breath until we tick over to northern hemisphere new crop. The scary part is the amount of demand that is doing the same thing – as has been the case all year – “what if” does not mean the market needs to rally however.