SO IT seems the weather remains favourable for harvest conditions across all major Australian grain belts.
Yields continue to be strong and the quality range is surprisingly holding between Australian Standard White (ASW) and Australian Premium White (APW) grades on the east coast.
Western Australia remains the exception as they are yet to bin any wheat over 13 per cent protein.
As mentioned in last week’s report we are undoubtedly facing a monster Aussie wheat crop with total national production pegged at about 32 million tonnes.
So with the yield and quality points aside let’s look at the season so far.
The Australian dollar has featured in many grain news columns within the past week and to date has been one of the saving graces for domestic wheat and barley prices.
The depreciation of the Australian dollar allowed us to engage in some trading and hence we saw Newcastle APW hit about $235/t about two weeks ago.
Today we see bids floating around $220/t, so the small rally has come and gone.
The barley market is running a similar course firming in the past week for the same reasons as wheat.
Current F1 values fetching $170/t Adelaide and $175/t Geelong back from highs of $180/t and will remain under pressure as the southern states continue to work through their harvest programs.
In a large production environment such as this year it is critical to engage in such rallies and until we see a major shift in global grain fundamentals, it may be our best chance to chip away at this grain giant.
To quickly elaborate further on global fundamentals, we see no major issues in production within the medium term.
The US winter crop is in and will have no significant effect on markets as it lays dormant for the next two months. Additionally, we have also seen that Russia has planted an additional one million hectares of winter crop this year.
So with increased production on top of an already burdensome carry out, the global wheat and barley books have never been heavier.
Yes, the above is a bit of rinse and repeat from previous reports with expanding production and large carry-outs, however we just want to outline that despite prices being lower than short term averages, there are still opportunities to market grain.
The recent rallies we have seen during this month are prime examples of good opportunities to sell and may yet be relived if we see some further help from the Australian dollar.