EU futures were higher, North American lower.

In market news Monday;

• Wheat fights off the lows
• “Phase 1” trade deal still not executed
• China domestic pork prices softening in response to supply outlook

The parallels between this week’s rally and the last time wheat tested the highs was not lost on the market. Early selling suggested the spec thought this maybe deja vu and they pushed the market lower only to run into a solid round of steady buying which trimmed the market to small losses.

The risk-reward calculation to short the wheat market is not that compelling today.

The US planting conditions are less than ideal and absolute acres are extremely low. Yes, there is enough wheat in the world today but there is always the risk that the US becomes an island.

Exports account for around 30pc of total wheat demand. Once you take some inelastic demand into account it doesn’t take much of a production pull back to render the US’s export program insignificant to price. Futures can run their own race and values can ignore export parity.

Trump is still sitting on the bill passed by the senate to support the Hong Kong protesters.

This is a tough position for the President given China’s public condemnation of the proposed law during what is a crucial stage of the trade negotiation.

The senate’s position is pretty clear with 417 to 1 voting yes (not sure who the 1 was).

Given the challenges the two countries have had getting “Phase 1” executed it becomes increasingly difficult to see them enacting something concrete in the short term.

Additionally, the Chinese have expressed a reluctance to progress the process too far before the US election with a theory that, should Trump not be elected then this goes away.

Then add in the fact that Chinese sow numbers are recovering. All indications are for an increase in feed demand and China’s ability to play hard ball diminishes, especially if there is a SAM production problem.

Australia

Aussie wheat markets firmed yesterday, the grower cash boards kicked off the day $1-2/t higher and other markets rolled on from there we saw offers in the trade lift $2-4/t in the south and in the north bid side showed some strength.

Wheat values in the west moved higher late in the day with larger percentage of protein around and boats currently loading in Geraldton and Kwinana, with more vessels to come over the December period.

Harvest through New South Wales is nearing the finish line with canola and barley all but done and wheat over 50pc through.

Favourable harvest conditions will prevail across the country today.