News yesterday of China devaluing the RMB adds another dimension to the equation. A weaker currency makes imports more expensive, so will this have a rationing effect on China's demand for grain and see prices fall? I've never done the numbers to say how inelastic China's wheat demand is but even if it's only 5% elastic, that's a fair quantity to come out of the balance sheet.
Coupled with relatively high stocks-to-use leading into NthHem harvest and it looks increasingly like we'll need to see El Nino play-out for prices to go higher.
Here in SA, recent rains have been substantial and minimal crop yields are just about locked-in if we get another decent rain event. But... it did switch off around this time last year, so not over the line yet.
I'm still yet to hear a convincing argument for higher wheat prices in the next 12 months but geez it'd be nice if we somehow snared a decent Aussie crop AND higher prices. We can all dream.
