GRAIN and oilseed price highs for 2014 may have already been set, despite only being in the fifth month of the year.
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Rabobank expects the significant building of global stocks to weigh heavily on corn soybean and wheat markets through the second half of 2014.
However, Australian growers may still have opportunities to take advantage of some relatively attractive prices.
While there remains a long way to go in this growing season, global grains and oilseed markets have all but cleared the first production hurdle of the year, with the Brazilian and Argentinean soybean harvests expected to yield an incredible 141.5 million tonnes, including a record harvest for Brazilian producers of 86.5m tonnes.
With the South American harvest just about wrapped up, global grains and oilseeds markets will now shift their attention from old crop supply and demand fundamentals to new crop production expectations, in particular United States and Black Sea production.
While the general expectations are for global stocks to increase in 2014, there are some important developments to watch.
These include US corn planted acreage - the US Department of Agriculture (USDA) currently forecasts a 3.8 per cent year-on-year decrease in US-planted corn acreage in 2014 - and continued political unrest in the Black Sea region, which could affect the ability to harvest and export grain from the region come July.
The next two months are undoubtedly crucial to global grain price direction, with northern hemisphere weather and production expectations likely to drive significant price volatility through global markets.
Already we have seen some opportunities to take advantage of diverging Australian and global prices.
Despite continued bearish sentiment during the past two weeks, Australian grain prices have remained relatively well supported.
Australian east coast wheat prices declined just 1.4pc during the first two weeks of May, compared with a 4.4pc decline in the price of Chicago Board of Trade (CBOT) wheat throughout the same period.
Tight domestic carry out stocks - particularly for wheat - coupled with a significantly smaller-than-average outlook for winter crop production and continued speculation of a developing El Niño in 2014 have all been supportive factors for Australian grains markets.
While our long-term expectation is for global grains and oilseeds stocks to continue to build this season, there are definitely enough production variables to drive upward price spikes.
Taking advantage of these opportunities when they present will be key for Australian growers in 2014.
Graydon Chong is Rabobank's senior grains analyst.