Wheat commentary: US exchanges back up on drought fears

US futures were back up Monday as fears of drought affecting crop conditions saw funds covering short positions and pushed Chicago prices to five-month highs.

Strong buying was seen on both major US contracts with the spread between Chicago and Kansas narrowing as the SRW contract was up 3.4% for March and May, while HRW was up 2.7% on the front months.

Things were a little less exciting in Europe, with the Euronext milling wheat contract advancing 0.8% on the front month and 0.6% on the second.

On the cash market a stronger AUD and higher bids heard in the inland market pushed the Agricensus APW assessment up $4.25 to $239.50/mt FOB Western Australia.

In Russia, March offers were given Monday in the range of $198-$200/mt FOB Black Sea, largely unchanged from last week, with April heard at $202/mt FOB.

With bid and offer levels insufficient to move the price, the Agricensus assessment for Russian milling wheat was unchanged at $196.50/mt FOB Novorossiysk with the ruble failing to gain ground against the dollar.

Indications were given for Ukrainian feed wheat offered at $188/mt FOB panamax ports against bids at $184/mt FOB – with the Agricensus assessment moving up $1 to $186.50/mt FOB Ukraine as the hryvnia strengthened against the dollar.

Agricensus did not assess Argentinian markets Monday, with offices closed for the first day of Carnival.

Elsewhere, US wheat export sales inspections came in at 487,902 mt, up by nearly 60,000 mt on the previous week and 163,000 mt higher than the same point of 2017.

And Russian exports seem to have shaken off a weather-related slowdown which has limited the pace of sales over the past fortnight, with wheat exports in the week to February 7 reported at 790,000 mt – with total sales up 37% year-on-year at 24.51 million mt.