Reports give grain values boost

Then we had the end of June United States Department of Agriculture Grain Stocks and Planted Acres Reports, and all grains got a shot in the arm. Wheat rallied by around $A16 a tonne to post its highest values since May 14. It broke the downtrend in wheat futures prices, but only after a new low for June was put in place.

So, the wheat market put in a June low that was lower than the May low, with the June high falling well short of the May high. That is generally a bearish signal for the wheat market. Despite the issues in the US corn, soybean and spring wheat markets, the market is not prepared to push to new highs and is testing the lower end of the price range.

The trigger for the sharp rally on Wednesday night last week was the planted acres report for the US corn and soybean crops. Acreages for both crops fell short of expectations. The surge in corn and soybean prices dragged wheat higher, even though the USDA upgraded its estimate of the area planted to winter wheat.

The market then pulled back before the US long weekend to start this week, but that was as much to do with traders not wanting to be exposed to changes in the weather outlook while the markets were closed.

The problem for wheat is that globally things are not looking too bad on the supply side. Certainly, of all the grains, wheat supplies are under the least pressure this year.

In North America the US spring wheat crop and the Canadian wheat crop are both in trouble from very hot and dry conditions. There have been periodic rainfall events, all of which tend to stall any price rallies when they occur, but it would seem that all these crops remain under pressure from the drought conditions.

However, the US winter wheat crop, which makes up the bulk of US production, is in good shape, although there have been some rain delays to harvest.

Elsewhere most of the weather issues in Europe and the Black Sea are behind us. The latest forecasts are for a big Russian wheat crop, and the Ukrainian crop could well be headed to a record, although wheat should get support from strong corn prices, which will help increase demand for wheat into feed rations.