• Global wheat price becomes regional; US market rationing export demand: The world wheat market stays complex. US cash prices have rightly shed historically large premium to other origins, but otherwise, market in Russia, Europe and the Southern Hemisphere have independently found equilibrium. Other than the US, global cash wheat markets have been unchanged since October.

• Russian wheat is the world’s cheapest. Importers continue to source Russian origin in the spot market, a strategy that has been rewarded. Yet, we note that Argentine fob prices sit at $370-380/mt, and unlike recent years Argentine wheat is not probing for demand. Aussie fob values are also quoted at $365/mt, well above EU/Black Sea prices. Gulf HRW is working to keep domestic stocks adequate and export demand confined to captive markets.

• Gulf HRW does compete with Argentina below $8.50/bu, which reflects fundamental support. We also expect current world price relationships to be unchanged into spring. Non-Black Sea markets can’t add to demand amid tight stocks. Russian exporters must maximise shipments amid this year’s record surplus with exports of 44-46 million mt.

• Soybeans/soymeal rally on spreading and end user pricing in soyoil futures: Soy futures ended the week mixed with soybeans/soymeal values recovering from Thursday’s lashing while speculative liquidation continued to pressure soyoil.

• EPA confirmed that canola/rapeseed oils are confirmed to be US biofuel acceptable and are eligible for US for D4 or D5 RINs. This new competition for US soyoil adds to the importance of cash feedstock price spreads. And the EPA’s announcement of using eRINS for EV’s will cut estimated US domestic soyoil demand by 400-500 million pounds.

• This has pummelled US soy crush margins. The pressure on margins could trim US soybean crush rates by 15-30 million bu thereby adding to 2022/23 US soybean end stocks. We fear that additional liquidation will befall US soyoil futures in the week ahead.

• CFTC indicated that funds are holding a net long soybean position of 102,100 contracts, up 20,000 contracts in the past week. We see the changed fundamental outlook for soyoil as creating bearish headwinds for soybeans with normal Brazilian weather. We see March soybean futures above $14.50 as overvalued.

• Chicago corn collapses as chart support fails; Argentine weather needs monitoring: Speculative liquidation sent Chicago corn futures to losses of 10-15 cents. The widening of spreads is indicative of current weak demand. Crude’s correction lent additional weight. Managed funds on Tuesday were long a net 192,000 contracts, up 21,000 from the previous week. Additional selling is possible early next week on the weekly close below the November low.

• Upside price risk is present amid threatening Argentina weather, which has trended warmer and drier in the last 24 hours. We also note that Brazilian futures and cash prices are not following Chicago lower. Brazil’s spot and March contracts have widened their premiums to the US rather quickly. A window for improved exports opens between Jan and April.

• Strong fundamental/chart resistance lies at $6.75-6.80 basis March futures. The long-term outlook turns bearish if the end of La Niña boosts precipitation in Argentina in January and February.

• World wheat markets extend correction; funds expand short position: Wheat futures ended lower again amid a lack of bullish input, coming rapid harvest progress in Australia and weakness in the US corn market. Updated Russian interior prices are unchanged week on week, and much of this winter’s business from North Africa and the Mideast will be given to Russian exporters. The catalyst needed to trigger short covering remains absent.

• But funds’ short position in Chicago on Tuesday was a sizeable 58,000 contracts. Another 5-7,000 contracts have been added since. At current prices, there is no room for adverse winter weather to negatively impact Black Sea logistics, and importers are still only covered through mid/late winter. The recent collapse is in increasing demand. A weakening US dollar is also noted. This is no place to turn bearish

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