For the moment at least, Chinese tariffs on US soybeans are not the main factor impacting US grain prices.
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Ongoing rain during June - following the second-wettest May on record for the US corn belt - has delayed or prevented corn planting and challenged yield potential.
Such has been the market impact, even soybean prices found higher ground and moved above US910 cents a bushel for the first time since February.
Importantly for Australian farmers, wheat prices have also been pushed higher, with current levels now looking to be sustained over the coming year.
Rabobank estimates that relentless US rain over the past eight weeks has prevented planting of 7.5 million US corn acres, to deliver the smallest planted area in a decade.
The impact of delayed planting and ongoing rain has also put crop yield prospects under pressure, with the US Department of Agriculture currently estimating only about 56 per cent of the crop in good or excellent condition.
This is a six-year low for this stage of the season. Lower area and yield concerns have moved Chicago Board of Trade corn into a range only rarely touched for five years.
Against this backdrop, it will be a battle for the US to achieve average corn yields this year.
However, under similarly poor conditions at this stage in 2017, the US crop recovered to produce a record 177 bushels per acre.
As such, volatility in corn markets will be a feature until yields become more apparent, and this will deliver volatility to wheat markets - and gains if US corn prospects go further "south".
This all has has led Chicago Board of Trade wheat five per cent higher in June, following gains of 17 per cent in May.
While the rain has delayed the US winter wheat harvest, and total US wheat acres are now forecast to be the lowest since records began, the key driver of the price increase is the anticipated substitution of feed wheat for higher-priced corn in the US and globally.
Rabobank has lifted our forecast for Chicago Board of Trade wheat and now expect it to trade towards US540 cents a bushel for 2020, up four per cent on last month's forecast across the entire 12-month outlook.
However, additional grain production outside of the US, compared with last year, offsets prospects of further significant wheat price rallies.
This includes 17 million tonnes of extra corn from South America, a forecast additional 50 million tonnes of wheat mostly from the Black Sea region and Europe and 12 million tonnes of barley.
In particular, Black Sea values continue to set the floor on wheat export prices, showing there is no shortage of wheat globally.
Russian wheat continues to trade below $US200 a tonne and has only registered a small reaction to higher Chicago Board of Trade values.
As July opens, Europe is experiencing a heat wave and hot weather is predicted for the Black Sea region.
However, more than a few hot days will be required to really affect wheat yield at this stage of development and with existing soil moisture.
Russian spring wheat yields could still be impacted by extended periods of hot weather, however, for now, the crop remains in good shape and still expected to contribute to a Russian wheat crop in the order of 77 million tonnes, the second largest on record.
