How low can wheat go?

Originally posted by yellowcake ↑

hera Aussie wheat will be 15-20mmt IMO. The following 30 day Australian rainfall map, week forecast and 30 day average temperature deviation map does all the talking

http://www.worldagweather.com/pastwx/pastpcp_au_30day_816.png">

http://www.wxmaps.org/pix/prec7.png">

WA has endured an expectionally warm August/September and SA Vicco also warmer. I reckon SA and Vicco are likely to start screaming for rain and there isn't anything out there at this stage. 30 degrees here in WA on Friday this week. Frost damage over East is the big sleeper also.

http://www.worldagweather.com/pastwx/pasttmax_anom_au_30day.png">

Basis is strong because Australian wheat quality is anticipated to be 'good' (potentially higher protein with the unfolding dry pinch) and end users don't buy the big global crop bs. Even if it is somewhat large there are worryingly small amounts of quality wheat for durum and milling available out of the major exporters.

US winter drought. US/Canada spring wet harvest. Europe wet harvest. FSU, you seriously want to rely on that part of the world? Argentina imploding economy (see FSU).

Why would end users come to Australia to buy the most expensive wheat in the world when they can get it in Chicago for 500c a bushel? ANSWER there aint nobody selling quality wheat for 500c a bushell anywhere. The sellers in Chicago are the same ones selling down gold and silver futures - the global paper printing masters. Manufacturers of deflation. You can't eat paper shorts and that is why basis is now writing a story all of its own and will continue to react counter contrary to how those looking to history for guidance will be wrongfooted by the unmanipulatable basis. In fact it could be argued the more 'intervention' on the short side of commodities, the stronger basis levels will become. basis of $70/t will constitute over 25% of total sales prices for a WA producer in the spotcash market. I also reckon there is less forward selling on the books than most would assume.

Just my two bobs worth. Oilseeds acreage is going to be slashed in 2015 and the Sakura/Boxer Gold manufacturers are moving to cash in with significant price rises for next year. Lock in your trifluralin and avadex prices because many will start to swing back in order to save money. You can book ammonium sulfate at $155/t for next year in WA currently.

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Hi YC,

Most of SA has that much subsoil moisture (Mallee, far west, upper north excluded) that even another half inch will still see an average crop come off. But yes, if the rainfall is below or well below average, that number I mentioned will come off quickly. Frosts are the other wildcard, as it's so hard to estimate until you get into it and it has been a bad year in that regard.

Price-wise, the only thing working for growers will be a relatively low exportable surplus, which could mean some pops at various ports, as exporters fight to secure early shipping slots. Already, payment terms on cash contracts are crunching in and I would expect deferred payment terms to be quite attractive this season, especially for those exporters borrowing in AUD. All good for growers and as always, there will be opportunities from shorts and spreads.