THE gains were entered into the Chicago Board of Trade futures for wheat after the July USDA report was defended last week, with closing futures lifting 1.5 US cents per bushel, week to week.
However, it masked the first daily move to see modest price declines earlier last week, with a sharp midweek rise to more than 550 USc / bu on September and December contracts.
Half of the profits were handed over on Thursday and Friday night last week, to keep prices close to unchanged from the previous week.
It is positive that the initial price rally has been maintained.
Not so positive that midweek price spikes were not built on, but that may be a temporary setback.
Over the next three to four weeks, the weather will drive US corn and the future of soybeans, with critical pollination now in full swing for corn, and later, soybeans will enter the critical phase of their pod set.
There may be spills to wheat, especially from corn, but basically wheat is more likely to find its own direction.
The price spike in the middle of last week seems to have been driven by the price paid by Egypt for Russian wheat.
Newswires quoted prices of around US $ 8 per ton higher than what they had paid a week earlier.
The market takes this to show that global wheat prices are strengthening.
This also triggers purchases on the futures market because funds scramble to release short positions (for sale).
Basically we also get support from concerns that global wheat crops are still contracting.
The latest concern is dry weather on the outskirts of Russian wheat plants.
Any drop in spring wheat yield in one of the main northern hemisphere areas will add to the shrinking crops available from major exporters over the next 12 months.
Meanwhile Australian wheat prices adjust to US futures movements.
Over the past week we have seen further price reductions in New South Wales and Victoria, and small increases in the main export zones of South Australia and Western Australia.
The end result is that baseline levels in the Newcastle and Port Kembla zones are approaching the level of export parity quickly, leaving their drought premium far behind us.
At the same time, rates in South Australia and Western Australia increased slightly, also approaching export parity rather than with discounts as has happened for most of this year.
We also see that the spread between Kwinana and Port Adelaide has returned to normal.
The final conclusion is that our new season market has placed a drought on the east coast behind us, and all port zones are now basically in harmony with global markets.
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