GRAIN prices continued to edge lower last week on improving crop conditions through south eastern Australia and news the Black Sea will harvest its largest ever grain crop.
Northern grain markets remain focused on the grim winter crop production outlook for the large western production areas, maintaining the large premiums to the southern markets.
Northern grain buyers are already budgeting on drawing a large proportion of the new season’s grain supplies from the central and southern NSW because of the disappointing growing season gripping much of the northern grain production areas.
Sorghum prices have jumped by about $30 a tonne since June and has farmers readying for a big planting. New season’s sorghum prices are reflecting around $300/t into the Darling Downs and $310/t.
Newcastle wheat prices for the 2017 harvest fell by $10/t to $20/t and Port Kembla lost $10/t to $15/t for the week.
US wheat futures tumbled after the USDA delivered a very bearish August world supply and demand estimate report late last week.
US wheat fell after the USDA forecast for the spring wheat came in well above market expectations.
CBOT wheat futures were sold sharply lower as the market slashed the premiums for the high protein wheat on larger than expected supplies. Benchmark CBOT wheat futures have now fallen by 25 per cent since the highs of early July.
Changes to the global wheat outlook were also negative with rises in the size of the Black Sea crops.
The USDA surprised analysts by lifting its forecast of Russia’s 2017 wheat crop by 5.5 million tonnes to a record large 77.5 million tonnes.
If realised, this would be five million tonnes larger than the previous largest wheat harvest last season. Ukraine’s wheat crop was also raised by 2.5 million tonnes to 26.5 million tonnes and Kazakhstan’s harvest was increased by one million tonnes.
Black Sea winter wheat production estimates were raised on higher than expected yields in the harvest results to date, the USDA said. The Russian winter wheat harvest is about a third complete while Ukraine is wrapping up. Spring wheat conditions across Russia and Kazakhstan also remain favourable, the USDA said.
Total Black Sea wheat production for the 2017-18 season was raised by nine million tonnes to a record large 118 million tonnes.
Despite reductions to wheat output in the US, Canada and the European Union, global wheat production was increased by 5.4 million tonnes from last month to 743 million tonnes, due to the hike in Black Sea wheat production.