CASH MARKET WRAP: National holidays calm cash activity

3 May 2019


The wheat market ended the week with mixed signals, as US futures went in opposite directions while the global cash market fell further, ahead of the new crop’s arrival.

With a heavily short spec position, bears in the wheat market were vulnerable to the first hints of concern for what has otherwise been a near-perfect growing campaign for next year’s crop.

That came on Thursday as SRW bounced 2% after heavy rains in the Midwest were joined by reports of a cold snap expected to hit western Europe next week.

Although that brought about the first positive close for SRW in a week – leaving the contract up 0.6% by 0845 in London on Friday – HRW was unchanged after reports from the field confirmed expectations of strong yields in the US.

That meant the spread between SRW and HRW grew further, touching 40.5 points at one stage on Friday morning – a gulf not seen since September 2007.

Cash markets were lower as sellers priced in the arrival of a new crop, but were unable to drum up buying interest, with Russian 12.5% down $5/mt to $209/mt.


Corn prices rebounded over the course of the week as unwavering rain across the US Midwest continued to raise questions over farmers’ planting decisions.

With crop progress data showing farmers are well behind the five year average – 15% complete versus the 27% average, fears are growing that the crop may not be as big as first expected.

Thrown that lifeline, May futures rebounded just over 4% to reach $3.62/bu over the course of the week, rallying from a contract low established at the end of April, as funds’ record net short prompted some profit taking.

Elsewhere, Argentina’s corn crop continues to see outstanding yields with analysts at BAGE pushing their production estimate to 48 million mt – 2 million mt higher. 


Futures extended losses from last week, falling for three consecutive sessions and July futures were down 3% as China buying dried up and demand slackened on public holidays.

Throughout most of the week, the lower Board value failed to shift cash premiums higher because of weaker Brazilian and Argentinian currencies, lower demand from China and growing inventories.

But by mid-week cash premiums at origin in the US Gulf and Brazil rose as logistic issues and a firmer real filtered through.

Yet Argentinian premiums remained stagnant.

The difference between Brazil and Argentina premiums moved to 65 c/bu on Thursday from 58 c/bu the previous day and flat prices for Argentinian beans hit $302.50/mt, $23.75/mt less than beans loading out of Paranagua.

Enquiries were largely halted from buyers in China from Wednesday because of a three-day public holiday, but limited bids and offers were heard over the week with premiums rising in line with gains at origin ports in the US and Brazil.