RAIN through dry parts of the US hard red winter (HRW) wheat belt has seen US wheat futures fall, giving back most of the gains made throughout April.
Both Chicago Board of Trade (soft wheat) and Kansas City (hard wheat) futures slumped on Monday and Tuesday on the back of storms in parts of the US Great Plains region, in spite of the fact the most severely moisture stressed crops received little rain.
The market is now watching to see whether forecast follow-up rain, slated to arrive late this week, delivers a drink to areas that need it most.
In Australia there has only been a modest fall of a couple of dollars a tonne in wheat prices in most port zones, with the market instead taking its cue for new crop pricing from the continued autumn dry.
While the sowing window is well and truly open the lack of any meaningful rain for at least the next week is starting to spook some within the industry, especially given low levels of subsoil moisture in many regions.
Commonwealth Bank commodity analyst Tobin Gorey said he felt the rain in the US was unlikely at this stage to be enough to prevent US HRW crop losses reaching a level to run down the large stockpile of HRW wheat.
He said while world balance sheets showed large volumes of wheat in store, much of this was stored in non-selling areas, such as China.
“In our view there is enough of a cut in stocks to lift prices from the very low levels seen over the past couple of seasons,” Mr Gorey said. “We are not though arguing for Kansas wheat to return to seven, or even six, dollars, but we think levels of around $US5.50 a bushel are more likely.”