THE big wet across Australia continues, with the systems moving further south and a little further west than previously.
That means it has hit more of South Australia than earlier rainfall systems, with very large falls in the Mid North causing flooding and some crop losses.
The floods in Australia are getting the attention of the international media, particularly when the whole of South Australia lost its electricity for a considerable length of time.
The wet conditions had already filtered into grain market news, but this incident lifted our seasonal conditions to a higher level of exposure.
The global wheat market is exposed to a lack of high protein wheat, and the season in Australia looks like continuing that issue.
While some crops have been lost, others will yield well, but that will come at the price of lower protein levels.
Also, if this rain does not stop soon, we will end up with more and more downgrading, with fungal staining likely to be an issue on some wheat varieties even if we do get to harvest with dry harvesting conditions.
In global markets the USDA released their grain stock estimates for September 1 late last week, and there were surprises all round.
Both corn and soybean stocks come in under expectation, but not so for wheat. Wheat stocks were pegged at their highest levels since 1987.
The large stock numbers initially sent CBOT wheat futures sharply lower, but a separate USDA briefing reversed that price move as they announced that spring wheat production in the US had come in under previous projections.
Spring wheat is normally high protein wheat, so any drop in supply simply adds to the issue for global supplies of high protein milling wheats.
Minneapolis spring wheat futures moved to a US122.5c/bu premium to CBOT wheat futures at one stage after the numbers were released.
Eventually the lift in spring wheat futures flowed over to CBOT futures, and so we ended trading last week with a modest price rise from the day before.
The other disturbing news for the market was a report from the International Grains Council (IGC), indicating that global winter wheat sowings will not change a lot this year despite the low wheat price.
We may see reduced plantings in the US, but in other countries, where currency moves have shielded wheat growers from the worst of the low prices, acreages might increase.
That is particularly so for the Black Sea region.
The other problem is that if you are a wheat grower, what else can you grow?
There is little incentive to shift to barley, or even if possible, to corn, soybeans or canola.
The stronger rapeseed prices in the EU will likely see that area held, but there is not likely to be a big shift from wheat to that crop because of production complexities with new insecticide regimes across the EU.
There is a mixed view on planting conditions so far, with the US Midwest being wet, and reports of dry topsoil conditions in Russia.
Any issues relating to planting conditions may result in less than ideal timing, or patchy emergence and establishment.
The establishment of the next global winter wheat crop is yet to play out, with seeding just getting underway.
It is where most of the world’s wheat comes from, so it will be watched closely to gauge any potential move in global wheat production for 2017-18.
