A strong rally in global wheat prices in the final weeks of August was a welcome reversal of direction for the trade, following a significant sell-off early in the month.
Appreciating by about 15 per cent in just three weeks - and to levels not seen since the panic buying of April and arrival of COVID-19 - the question is 'what's with wheat prices?'
After all, most agree the world is still on-track for record wheat production in 2020-21.
The first thing to prompt higher wheat prices was a 'derecho' wind storm in the USA on August 10.
This type of storm delivers hurricane-strength winds, but in a straight line trajectory, and it centred on the US corn belt - mostly in Iowa. This meant few, or no, wheat crops were damaged.
But private and public estimates of the damage to corn crops from the storm range from 800,000 hectares to 1.2 million hectares, and with average yield losses of 50 per cent.
This, together with dryness in western Iowa and declining corn crop condition, helped move Chicago Board of Trade (CBOT) corn up 12 per cent for the rest of August - and lent some support to CBOT wheat.
China's ongoing grain buying spree, including for wheat, also supported CBOT wheat to go higher during late August.
The US Dollar weakening from July into August was another factor to support US wheat demand - and therefore CBOT wheat.
Interest from managed money (from funds) - often part of price lifts and volatility - also swept the wheat price higher.
Between August 10 and the beginning of September, the non-commercial long positions rose to the highest level since February. This set up the highest net long position for the market since the April panic peak.
With a record wheat crop in the making, the interest from managed money was more about what's happening in alternative asset classes than the situation with wheat or grain more broadly - and what that means if you are trying to diversify your portfolio in a risk-off global economy.
Alternative asset classes are looking less attractive in the current macro global economy.
Both gold and tech equities are expensive and other classes will be prone to downside when government stimulus is reduced - while real estate lacks liquidity.
Set this beside the fact that funds like momentum and are looking for inflationary hedges in this uncertain outlook, and the managed money interest becomes clearer.
The first couple of weeks of September have seen an almost 4 per cent correction lower in the wheat price, showing that you ultimately can't stave-off underlying fundamentals.
These were all wrapped up in the United States Department of Agriculture's latest World Agricultural Supply and Demand Estimates (WASDE) report, which still puts the world on-track for record wheat production in 2020-21 - but with an upgrade of 4.5 million tonnes to 770.5 million tonnes.
This was mostly due to upgrades for Australia and Canada, and came in close to market expectations - reflected by CBOT wheat trading sideways to open this week at US542 cents a bushel.
Rabobank continues to see CBOT wheat trading between US500-550c/bushel in the coming 12 months, based on the lower exportable supply for the EU and still supportive demand for wheat as a staple food product.
This outlook is about US100c/bushel higher than it was during Australia's last bumper crop in 2016-17.
Now we just need funds to see some momentum in selling the Australian Dollar in November and December so that CBOT strength translates to good Australian harvest prices.