Where to from here for Chicago futures?

That process seems to have begun across the United States' grain futures markets at the end of last week, with corn, soybeans and wheat all down sharply from their previous daily close.

Wheat fell about US60 cents a bushel from the peak in prices a week earlier.

In Australian dollar terms the market fell $19.78 per tonne from the weekly close the week before, to last week's close.

However, that has still left the dollar value of March and December futures above $300/t for the start of this week.

Corn and soybeans also suffered steep falls into the end of last week.

As with wheat, corn and soybeans had also peaked a week earlier, but the sharp drop in prices unfolded on Friday night last week.

It would appear that there is a round of profit taking underway after a couple of months of rallying prices in all three markets. However, there were also some fundamental triggers as well.

Rains in South America have boosted soil moisture levels in drought-hit regions of Brazil and Argentina.

This will help some corn and soybean crops.

Already the early soybean harvest in Brazil, shows yields are a little better than expected.

Rains will do more to assist corn and soybean crops in Argentina.

For wheat, the heavy snowfalls in Russia are finally being seen for what they should be which is a positive for their wheat crops.

Not only does the heavy snow cover protect their winter wheat crops from the extreme cold, but it will add much-needed soil moisture in spring.

To that end, Russia's pre-eminent crop forecasting agency has lifted their new crop estimate by 700,000t to 77.7 million tonne.

That will still be down on the 85.9mt record crop from 2020, but problems with the 2021 Russian crop have been a major driver for the upside for wheat in the past couple of months.

The Australian market should not see the full impact of last week's decline in the Chicago Board of Trade futures, because only a small part of the rally was passed into our pricing.

However, it does mean that for the time being at least, we have seen the best of this post harvest market.

Where to from here is an interesting question.

There is probably not a lot of reason for wheat futures to keep moving up, or even to hold at current levels in the near term.

In contrast, it is felt that soybean demand needs to be constrained further, and demand for corn may also still need to be rationed. Higher prices are the mechanism to ration demand.

That may help support wheat.