Grain and oilseed futures were firmer.

In market news overnight:

• Wheat emergence concerns coupled with global demand drive values
• already talk of index fund asset reallocation
• corn still has plenty of harvest to chew through in the US
•  Trump indicating that the China talks are “going well”

Wheat markets turned the tide last night amid a pocket of global demand returning the focus on trade flows.

As evidence of the uncertainty surrounding the drivers in the market you just have to read the wires on a daily basis.

Crop emergence is an issue not only in the US, but is mixed at best in all northern hemisphere growing areas.

On a down day you will read about the lack of correlation to final yields, on an up day you will read how poor emergence matters this year given the low planted area. Both statements are correct. It just depends who is holding the conch.

Today marks the first day I have read about “fund reweighting”. This is simply a rebalancing of the basket in many of the more popular index funds – sell the ones that have outperformed, buy the ones that have underperformed.

Every year there is extensive debate around the size of the reweighting and the potential impact to flat price.

Kansas has definitely underperformed relative to many other commodities so it makes sense that it should attract some capital.

This coincides with an extremely low planted area so there will be plenty of noise around the impact to HRW.

The line in the sand for these calculations is year-end. Should KW rally hard from now until year-end the reweighting would be smaller, so it’s all largely speculation at this point but certainly a sentiment driver into the end of 2019.

Australia

Locally temperatures set to soar today through South Australia with most of the state expected to reach over 40 degrees as a catastrophic fire day has been announced for the state with growers pulled off the headers for a day.

Victoria is also set for a couple of hot days in which will bring the crop along, wheat in particular.

NSW harvest is edging closer to the finish line.

Aussie markets were relatively unchanged yesterday.  ASX Jan wheat traded $337/t early in the day then $338/t for small volumes leaving this market off $6/t from this time last week.

Melbourne Geelong port zone grower bids have been trading a fraction higher around $342/t range, site dependent.

Interestingly there are still a long list of sites that have grower bids below the ASX bid.

Remember that all east coast sites are deliverable (BHC dependent) and any sites that are below the ASX bid represents a very easy trade for the more vigilant trader.