Chicago Board of Trade wheat features fall $60 a tonne

The market was susceptible to a steep correction after the runup it had recently, though I expect last week's moves may have caught many on the hop.

Fund money is having a big impact.

Once CBoT futures broke below a technical support level, the sell orders were triggered thumping it down further.

The fund money added to the upside just a few weeks ago, and what they can give-ith they can take-ith away.

So what are the fundamentals telling us?

The bearish price sentiment was triggered by more rain through Europe, reports of rapid spring plantings in north America, and more speculation over the possibility of additional grain being exported from Russia and Ukraine.

Rains in Europe and improved conditions in north America are a reliever on a tight supply scenario this year and warranted some risk taken out of prices given the poor conditions had been priced in.

Regarding supply from the Black Sea, the market is struggling to price potential scenarios and fund involvement is amplifying the swings.

The reality is Russian wheat stocks are high and grain is being exported into major importers in the Middle East and Africa.

However, a significant increase in exports from the area requires some change to sanctions.

In terms of Australian prices, local buyers maintained a more cautious approach to pricing seeing values slip lower over the week again.

Reports of more Australian grain getting booked into offshore markets is supporting the notion that physical grain markets are not moving to the same extent as CBoT, and there remains a large disconnect between international values and prices bid to Australian growers.

Price levels are still historically high, but a week like last week can make everyone guess whether the market got swept up in the hype of the rally and question how artificial it may have been.

There's no doubt some of the price action in the CBoT market is artificial.

That's the nature of the speculative fund involvement.

Fundamentally however global grain fundamentals are tight, and after a steep correction in CBoT wheat last week, we still have December 2022 contracts trading at more than 1063 USc/bu or A$543/t in early June.

If prices can hold through June-July, they generally tend to hold through the back end of the year as northern hemisphere crop conditions are known and more accurately priced into the market.

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