Wheat prices rebound overnight on Russian tax increase.
Wheat futures are higher this morning after retesting yesterday’s lows in the overnight session. As French milling wheat opened at 3:45 AM, Russia was setting its new export tax at a record high of $91/MT for any new FOB sales in the December 8-14th period. The wheat tax is up $6.10/MT from the opening week of December.
The Russian tax increase is occurring even though world prices fell as the Moscow exchange changed how it calculates weekly tax, dropping prior FOB sales from its calculation. After yesterday’s WASDA report, many analysts project that they are way too high for Russian exports of 36 MMTs due to their restructuring trade to lower domestic flower/food costs. Some analysts have exports at 31-32 MMTs for wheat out of Russia for 2021/2022. 4 million metric tons of wheat will need to come from other sources.
Yesterday China secured Australian wheat, with commercial sources indicating the purchase amounted to 500,000-7 and 50,000 MMTs. This is the 2nd week in a row where China was a buyer of size in the Australian wheat market. The unknown is if China is buying feed or milling wheat. Feed wheat is a likely source as it would meet China’s specs and challenging to make milling quality out of the East. China has taken nearly 1.5 MMTs of Australian wheat in the past two weeks.
Next week becomes the last full week of trading for December, with volume notably already on the decrease in Ag trading. This either accentuates moves on the news or causes trade to turn quickly stagnant on the lack of news, as markets quickly turn into volatile tight ranges during the session.
South American weather overnight had precipitation falling across Córdoba in Argentina with rainfall totals ranging from .15-.85, while other Argentine and Brazilian crop areas remained dry. The EU and GFS models agree for a lengthy period of below-normal rainfall for Argentina and S Brazil into December 21. Several weak fronts will try to produce a few light showers, but widespread, meaningful totals are not foreseen.
Cattle futures are mostly lower on Thursday, while the cash trade was reported one dollar-2 lower in the South at $140, and the dressed trade in the north was steady at $220. Show list did not sell out, with some feedlots still looking for $142. This week, any additional business is anticipated to be steady with Thursday’s pricing. Boxed beef values were mixed with choice value finding support after falling more than $10 in the last week, choice boxes were $0.44 higher for the day, and select fell a $1.41.