If the US is looking at a poor wheat harvest in the south where demand will need be rationed, should not the Chicago futures be showing signs of strength above demand for other exporting destinations such as Australia. Why then is it the case that even as we have had a recent good harvest and future harvest prospects are good as well, our basis has not been more volatile to the downside in comparison to drought constricted availablity out of the US? Really it should be that Australian wheat producers are looking at a neutral to negative basis shouldn't it?
Personally I think the basis which is pure and unadulterated physical demand and supply, is calling the futures market in Chicago as being under the influence of distortionary factors such as hot printed money? Just as gold and silver futures discount to actual physical trades.
