International and national summary
National background comments: report for the week ending 13th September, 2019.
The next update will be on Friday 20th September, 2019. Direct links to reports on each dairy region immediately follow this international and national summary for grain.
Driving Prices Up
Concerns about the impact of dry conditions in Argentina have brought a touch of support to offshore wheat markets over the past week.
- With Northern Hemisphere winter wheat growing countries having just harvested another large crop, dry conditions in the Southern Hemisphere have struggled to have much of an impact on offshore markets, to date.
- However, the time of the year when wheat crops from the Southern Hemisphere come on line is fast approaching, hence offshore markets are potentially starting to take more notice.
- In the US the harvest progress of spring wheat crops remains behind the 5-year average pace, with concerns about quality also coming to the fore.
- The development of corn and soybean crops also continues to track along behind the 5-year average pace.
Driving Prices Down
USDA export numbers continue to show the impact of strong competition, with USDA wheat export sales numbers released last week showing a drop of around 40% from the moving 4-week average.
- In Canada, StatsCan wheat stocks number came in around 20% higher than market expectations while in France the government estimate of their soft wheat production has recently increased by 3%.
Global Trade News
In Russia and the Ukraine FOB prices (the price of grain sitting on the ship before it leaves the port; i.e. not including shipping costs) have weakened, with exports from these countries keeping the pressure on prices in wheat export markets.
- Trade tensions between the US and China continue to keep the pressure on CBOT markets, despite some refreshed optimism that the two countries could be working towards a solution.
- China recently announced that it would lift tariffs on 16 US products, however these products did not include soybeans or corn, which limited the extent to which this news was able to support CBOT markets.
- In a sign of “good-will” US President Donald Trump has announced that he will delay the implementation of planned tariffs from October 1 to October 15. The official reason was the 70-year anniversary of the formation of Peoples Republic of China and further talks between the two countries set to resume next week.
- Crops in southern NSW and WA are lacking moisture and are also dealing with hot weather. There is currently an elevated risk of frost throughout parts of VIC and SA.
- In the areas where crops are still developing good spring rainfall is needed.
- Harvest continues throughout Central Queensland for those lucky enough to achieve production this year.
- In other grain growing areas, warm dry and windy are decreasing the likelihood if some crops progressing to harvest, meaning more crops will be cut for hay or silage.
- It seems that each year the debate about how much grain will get cut for hay comes along. At present it is not believed that the rates of crops being cut for hay will be much higher than similar years (i.e. other dry years).
- While there will be some grain growers who will hit the hay button due to the production outlook others will be doing so for economic reasons (i.e. better expected financial returns for hay than grain).
- The forward market for wheat has taken a firmer tone this week with concerns about the deteriorating conditions of crops in different of the country (particularly NSW) and firm domestic demand driving this trend.
- Like wheat, feed barley markets have also taken a firmer tone. Except for parts of southern Victoria, feed barley was also moved higher this week.
Price change in table below reflects moves since previous report (6th September, 2019)