International and national summary
National background comments: report for the week ending 3rd July, 2020.
The next update will be on Friday 10th July, 2020. Direct links to reports on each dairy region immediately follow this international and national summary for grain.
Driving Prices Up
This week saw the release of the USDA quarterly stocks and acreage report, with unexpected drops in wheat, corn and soybean acreage all catching markets off guard.
- At time of writing, CBOT wheat futures were back up at 2-week highs while CBOT corn and soybeans were at levels not seen since March.
- In the US ethanol production is back up to levels not seen since March and this has further support corn, and by extension, other CBOT markets.
- The recent EU estimate of their wheat production there is now showing a 10% year-on-year decline. However, the impact of expected strong competition for export business has tempered the impact of this decline.
- Winter wheat harvest in Russia has commenced with very early reports pointing to yield losses (noting this is early in the piece).
Driving Prices Down
Harvest pressures have again been seen in CBOT wheat futures, with this week’s USDA crop progress report showing a US winter wheat harvest progress is right on the 5-year average.
- In the lead up to the quarterly USDA stocks and average acreage report, speculative repositioning pushed CBOT markets both up and down, at different times.
- Concerns about fresh Covid-19 outbreaks, particularly in the US, seen in various financial markets have also brought some downside pressure to the agricultural markets over the past week.
Global Trade News
Various wheat tendering activity seen over the past week has added to the support seen in CBOT wheat futures.
- Public tenders conducted by South Korea, Tunisia and Thailand all showed business being won at similar values to a couple of months ago.
- China have availed themselves to a clause in the free trade agreement with Australia, allowing import tariffs of 3 and 2% to be placed on barley and sorghum imports respectively.
- With China having already announced an 80.5% tariff on Australian barley earlier this year, this is expected to have little to no impact on trade flows, however it does provide insight into the souring relationship between Australia and its largest trading partner.
- A change of fortunes in offshore markets gave local prices something of a reprieve from recent downward pressures this week.
- Rainfall totals for the month of June came in below average for the bulk of the countries cropping areas.
- Although spring and summer rainfall have provided enough moisture for crops in many areas to get though until now, soil moisture is current at average to below average levels in SA and WA cropping areas.
- Although Victoria and NSW are faring a bit better, areas such as the Wimmera Mallee are currently sitting on below average soil moisture.
- The month of July currently looks like another below average month of rainfall, meaning crops will need to make use of what moisture they have left before things improve (should current forecast be realised) between August and October.
Price change in table below reflects moves since previous report (26th June, 2020)