HIGHER protein wheats, such as Kansas City Board of Trade (KCBT) wheat futures, have pushed strongly higher in recent weeks to be back at the heights reached during April.
Other international wheat futures contracts haven't rallied to the same extent and continue to trade near the recent lows.
This is despite the market watching the events in Ukraine and Russia.
At the time of writing, there remains uncertainty about whether the Ukrainian grain corridor will be extended.
The Russians stopped inspections of vessels destined for Ukraine for a few days, but then resumed them again later last week.
For now, the market seems comfortable grain will continue to flow out of the Black Sea area - despite the Russians trying to leverage some influence, saying it is contingent on other demands being met.
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The last Commodity Futures Trading Commission Commitment of Traders report indicated that fund managers had increased their net sold position in Chicago Board of Trade (CBoT) wheat.
That means they're betting on the market going down.
If their view changes and they switch to buy back those positions quickly it could push the market up.
The improvement in KCBT wheat values, which is more akin to Australian APW1 wheat, is on the back of United States specific crop condition reports indicating the rains during the past month haven't improved the production outlook of the US hard red winter crop.
The US Crop Condition report released weekly by the US Department of Agriculture (USDA) lowered the percentage of crop rated good to excellent to 25 per cent from 28pc the week prior.
Some analysts indicate large areas of the US hard red winter crop are considered too far gone and are expected to be abandoned.
The annual crop tour of the US hard red winter crop starts later this week and will be closely monitored by market participants to verify crop conditions one way or the other.
The USDA released its updated World Supply and Demand Estimates (WASDE) last Friday night.
In terms of the major global production areas, 2023/24 supply is expected to increase in Argentina, Canada, China, the European Union and India, which is partly offset by forecast year-on-year decreases in Australia, Russia, Ukraine and Kazakhstan.
The net result is projecting the global wheat stocks-to-use ratio to be the lowest since 2014/15, with China holding more than half of those stocks.
If we take China out of the global balance sheet equation, the USDA is projecting the tightest global stocks since 2007/08.
That sounds relatively supportive of global wheat prices to me.
For more information or to see what values are trading, contact Clear Grain Exchange on 1800 000 410 or support@cgx.com.au
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