Wheat commentary: Drought talk pushes futures higher still

Wheat markets rallied on both the exchange and cash market, as dollar weakness and talk of drought in the US persisted into Thursday despite little in the way of new fundamentals.

The spread between Chicago and Kansas widened again, with Chicago up 0.9% for March and 0.8% for May, while strong volumes on HRW saw March up 1.8% and May up 1.7%.

Weekly net sales volumes from the USDA came in where analysts had expected at 311,000 mt – with Japan buying 84,800 mt, Indonesia taking 83,300 mt, and Taiwan with 78,500 mt.

News also emerged Thursday of three cargoes totalling 60,463 mt of US wheat bought by Japan’s ministry of agriculture at its weekly tender, as well as 24,220 mt of Canadian wheat.

European futures were up 0.5% for March and 0.2% for May, with the bulk of daily volume switching back to the front month.

Meanwhile, data from the EU saw the third-lowest export number on record, with only 81,908 mt leaving in the week to February 13 as a stronger euro and competition from Russia and Argentina eats into its world share.

France is one of the few success stories from the year – with sales 52% higher than last year at 4.42 million mt – while sales from the Baltic States have been higher too.

Although the APW market saw the most competitive inland bids down AUD 1 to AUD 281/mt in Kwinana, the weaker dollar pushed the Agricensus assessment up on the day by $2 to take it to $242.50/mt FOB Western Australia.

On the Black Sea cash market, the ruble gained 1% against the dollar and pushed CPT wheat prices in Russia higher with it, taking the Agricensus 12.5% protein milling wheat contract up a further $2 to $202.75/mt FOB Novorossiysk.

Meanwhile, a weaker hryvnia was able to push the illiquid Ukrainian feed wheat market down $1 to $187.25/mt FOB Ukraine.

Cash offers in Argentina were lower for March overnight, with 12% protein wheat losing $2 to $190/mt FOB Up River and pushing the Agricensus assessment $1.50 to $184/mt FOB.

Argentinian authorities issued licences for 76,193 mt Thursday, taking the total for the week to 171,799 mt.