Canola and rapeseed eased. Wheat and corn firmed.

• Chicago wheat up US13.75c/bu to 594c/bu;
• Kansas December wheat up 5.75c/bu to 676.25c/bu;
• Minneapolis wheat up 5.5c/bu to 739c/bu;
• MATIF wheat Dec down €2.25/t to €238.25/t;
• Black Sea wheat has not quoted since 11 August;
• Corn December up 13c/bu to 505c/bu;
• Soybeans May 2024 up 0.25c/bu to 1351.5c/bu;
• Winnipeg canola November down C$19.50/t to C$692.20/t;
• Winnipeg canola May 2024 down C$10.80/t to $718.30/t
• MATIF rapeseed November 2023 down €11.75/t to €407.25/t;
• MATIF rapeseed May 2024 down €5.25/t to €451/t;
• ASX January 2024 wheat down A$1/t to $403/t;
• ASX January 2024 barley unchanged at A$335/t;
• AUD dollar down 9 points to US$0.6328

International

It is questionable whether the market is showing signs of life or whether it’s a dead cat bounce. US wheat found a bid and a rare display of independent strength. The recent price action creates a laundry list of challenges. Fundamentally, the lower prices have unearthed decent demand as export sales came in at 632.8k vs expectations of 425k. At the same time futures moved higher. The question is whether the pace be maintained to warrant more risk premium and rationing. Funds investors don’t think so. They have added to the short position across all three US exchanges. 

Despite some fun and games across the US futures markets Russian wheat values could not give two hoots. And this is all you need to know about the wheat market. US futures are doing one thing but the global consumer has a poster of Russian wheat on their bedroom wall. The funds have been comfortable with this set up, giving them more and more confidence to keep on the sell side. A catalyst is needed to return the focus to a major exporters balance sheet which is as tight as it was in 2007/08. But for the moment cash (and by cash I mean Black Sea cash FOB wheat) is king. 

President Biden is about to address the nation regarding the Middle East conflict. This will be fresh off the Iranian backed Hezbollah issuing a warning that they are now “thousands of times stronger” than before. It’s like PE in year 10 with the captains doing alternative pick – Israel has the US, Hamas has Hezbollah. So far, the markets have largely digested the conflict with crude oil showing some strength but agricultural markets are business as usual. The issues will stem from the commitments other nations make. Iran for example needs 4Mt of wheat and 2.5Mt of barley this marketing year. Other countries such as Russia, Iraq and Syria have all either stepped up their presence in the Middle East or have experienced some isolated drone/missile activity as a result of the conflict. The Gaza Strip has an area 365km2 with a population of a little under 600k. But this is fast becoming a global issue that will undoubtedly skew trade flows. 

China wheat imports are predicted to reach 11Mt this year with many indicating 5Mt should come from Australia. Rough estimates so far indicate that 1.5Mt has already been booked for Oct forward.