All about the national and international grain market and how grain contributes to farm inputs and costs.
International and national summary
National background comments: report for the week ending 12th July, 2019.
The next update will be on Friday 19th July, 2019. Direct links to reports on each dairy region immediately follow this international and national summary for grain.
Driving Prices Up
This week CBOT markets have been awaiting the release of this month’s USDA WASDE (World Agricultural Supply and Demand Estimates) Report, due out Thursday night (i.e. just after time of writing).
- One of the key numbers that will dictate how markets will react to this report, in the shorter to medium term, are any changes to US corn and soybean yields, production and end stocks.
- In recent weeks US spring crops have been the key mover of CBOT markets and if the USDA “goes hard” in terms of lowering their estimates of US corn and soybean crop then we are likely to see some upward price pressure across the board.
Driving Prices Down
As winter wheat harvest continues to progress in the northern hemisphere this increase in supply continues to bring some pressure to offshore wheat markets.
- While US winter wheat harvest is tracking behind the 5-year average the condition rating of this crop is tracking along well above the 5-year average.
- If US soybean and corn numbers in this month’s WASDE come in above market expectations, this is likely to push CBOT futures lower across the board.
Global Trade News
As a result of the African Swine fever outbreak in China, demand for feed imports (including soymeal) into this market is set to take a hit over the coming year.
- With the US/China trade situation remaining at a standstill soybean exports from South America continue to win business in this key export feed market.
- The latest GASC (Egyptian) wheat tender saw Ukrainian and Romanian wheat win business. With the prices this business was won at coming in around 20% lower than some of the prices seen earlier this year, grain from these origins will continue to keep some downward price pressure on global wheat prices over the coming year.
- In a number of grain growing areas the rain gauges continued to tick along this week.
- While most of Victoria, SA, southern NSW and WA are all now tracking along relatively well, it’s a different story in northern NSW and Queensland.
- We are now possibly looking at another period of above average imports to northern NSW and Queensland, from other parts of the country.
- As a result, northern grain markets will most likely reflect import parity (the cost of grain elsewhere in the country plus the cost of freighting it there) at different times this coming grain marketing season (October 2019-September 2020).
- This season we saw track markets in Brisbane and Newcastle trade around $100/t higher than Kwinana (WA), as this is where the grain had to come from.
- However, with Victoria and SA looking at better seasons it seems unlikely that a freight premium of this size will be priced in, this coming season.
Price change in table below reflects moves since previous report (5th July, 2019)