WHEAT prices continue to trade in a band between $220 and $230/t with little activity in the market leading into harvest.
Internationally, key news included a big sale of US corn to China, formerly self-sufficient in corn production, which has kept the corn sector ticking along.
Once again, corn futures have forged ahead of wheat, with CBOT December 11 futures for corn US651c/bu, compared to US636c/bu for wheat.
Translated in Australian prices, CBOT prices for wheat ($A234/t) are marginally above Australian cash prices, reflecting a slight negative basis in Australia.
Earlier in the week, macro economic factors, in the form of a surge in crude oil prices, helped boost prices across the grains complex, however, the spectre of the European debt crisis is keeping a lid on potential upside.
Key announcements will be made today (Thursday) by the Europeans as to their debt arrangements which will have a big impact on the market as a whole, spilling into the soft commodities sector.
In terms of fundamentals, the US Department of Agriculture put out a planting report on the winter wheat crop, with 82pc of the crop planted, around the normal rate.
However only 47pc of the crop is rated good to excellent, below average, and in drought impacted areas of the southern cropping belt, such as Texas and Oklahoma, half the crop is rated as poor.
The Australian harvest, which has commenced in Queensland, northern NSW and the Geraldton zone in WA is not sufficiently progressed to be influencing prices, however there was market speculation about a potential wet harvest following a Bureau of Meteorology forecast for a wet summer in key cropping areas. This has ensured the market for quality grains remains relatively firm.
AWB’s Jon White confirmed there was good support for high protein wheats.
“Despite recent falls in the US wheat futures markets high protein wheats are holding up firmer and APH2 in the Eastern Pool remains unchanged at $337 a tonne.”
“Globally high protein wheats remain well supported, particularly for APH level proteins, as a smaller spring wheat crop in the US has led to their values moving to levels necessary to ration demand,” Mr White said.
“We are seeing strong export interest from Asian millers for high protein Australian wheat and prices are also being assisted by expectations of a lower than average protein profile in the 2011/12 Australia crop. “
And although there was pressure on lower protein grades, he believed the tight corn balance sheet would insulate wheat from large falls in the immediate future.
“We believe current values are well supported, as long as US corn remains at current levels. Wheat is now trading at very large discounts to US corn and is attracting interest from international buyers.”
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