FINALLY a decent rainfall worth mentioning across most areas of the Central West.
With anywhere from 20 millimetres in around Dubbo and up to 50mm further south, it will certainly freshen up the majority of crops and keep some optimism in the season.
Unfortunately for some in areas further north and west, rainfall totals weren’t as high and may have been too little too late in some cases.
Naturally, the widespread rain has cooled off the domestic market with new crop basis in Port Kembla dropping about $15 a tonne over the past 10 to 12 days.
Newcastle Zone pricing has held up somewhat firmer than further south given the uncertainty and dry conditions for the northern and western cropping areas.
Growers in the Port Kembla zone have experienced a bit of a double whammy with Chicago Wheat Futures coming under pressure with the Black Sea harvest now well underway.
Analysts are suggesting that the Russian crop could be five million tonnes larger than initially forecasted and as a result has given the market a bearish sentiment with another bumper crop to hit the market.
As expected a large percentage of the crop will be low protein and will set the bottom end benchmark for the global wheat market. Values being offered out of the Black Sea have started to move lower, as the early harvest pressure to cover shorts has passed and heavy farmer selling is starting to weigh on the market.
Going forward, the market will continue to watch weather advancements in Canada and Australia closely, being two of the main exporter’s with large production uncertainty.
Canada still has concerns with Southern Alberta and Saskatchewan looking relatively dry, equating to a large area of their cropping belt.
Similarly in Australia, weather is front of mind, as the western areas of NSW, and parts of Queensland remain critically dry, while there is still a lot of weather to get through for the remainder of the crop.
Basis will likely not weaken too much further until another widespread rain or until farmers start to sell.
Other inputs for Chicago Wheat Futures going forward will be the US corn crop and managed money (fund) positions.
The US corn crop has gotten through the critical pollination period, relatively unscathed for the most part, which has pressured the market lower, the next focus will be on weather during the grain fill stage of the crop.
Funds continue to hold a neutral position in the wheat market since the rally a month ago which is
uncommon, there is a potential threat that funds could retreat to the standard short position which would naturally be bearish for futures.