THIS week the majority of the industry will be attending the annual Australian Grains Industry Conference in Melbourne, so it’s looking to be a relatively quiet week ahead.
However, with a large contingency of the industry in one place, there is no doubt conversation will be revolving around the movement of the grain markets over the past month.
To recap we have had domestic values fall out of bed since the beginning of July.
Delivered Darling Downs old crop feed wheat was worth about $270 a tonne by the end of June.
During the course of July this has slipped to about $250/t.
With all markets there are corrections however, for the Australian old crop it’s difficult to see what will fuel it from here.
Last week, we spoke of value and there is still some out there, but it is a dwindling pool of demand. Consumers have their full attention on the new crop and even with the way the Australian winter crop is progressing, they certainly won’t be hasty in taking cover.
Among the bearish tones we have been seeing over the past month, there has been an ongoing discussion surrounding both the EU and US crop situations.
Firstly, let’s cancel out the US, any weather threat or event has all but been stamped out with acquitting rainfall.
So what we have seen is a see-saw affair that created light pieces of volatility in the US futures markets and no major influence on cash prices, particularly here in Australia.
Furthermore, their winter wheat harvest is coming to an end and all reports so far have been positive with only minor concerns over quality.
Moving to the EU and the progress and quality of the French crop.
Updated reports have continued to downgrade the French wheat crop back to a 31 to 32 million tonne crop, down from initial estimates of 41 million tonnes.
This has since spurred some solid price support in EU grain markets, with MATIF wheat up about $US8 to $US9 since the latest reports came in.
With this in mind attention is then drawn to the German crop and how it will progress.
Early comments are positive with no issues in test weights and quality.
The larger areas are yet to be harvested, however local expectations are high.
Overall, there are concerns for the EU crop so we will keep watch.
In the larger scheme of things, will it have a major impact on global supply and demand?
A major shift in the global grain dynamic will most likely require something more to spark up prices in a meaningful way and it is hard to predict what and where this will come from.