Grain Update | Bumpy ride for wheat futures

Bumpy ride for wheat futures


Cropping
In its monthly world supply and demand assessment, the USDA raised world wheat ending stocks by a further two million tonnes to 271 million tonnes.

In its monthly world supply and demand assessment, the USDA raised world wheat ending stocks by a further two million tonnes to 271 million tonnes.

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Grain markets also act as a good barometer of the prevailing weather conditions and the sentiment for a change. And grain prices continue to press higher.

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Light showers and patchy storms over the past week has brought limited relief from the expanding drought.

Sporadic scattered storms on the weekend resulted in a patchy 10mm to 15mm of rain through north of the state, extending down into the central west.

The storms provided a brief reprieve to the sweltering temperatures that have dominated the states’ grain growing areas through April. Farmers and grain buyers are wondering when the current sweltering autumn heatwave will end.

Some farmers through the southern slopes have already been forced to buy in barley to keep livestock going through the autumn.

Some of these areas are contemplating destocking ahead of winter, with time already running out for pastures to respond to rain.

On farm feeding is keeping barley prices well supported in the central west of the state where spot loads are being sold at $320 a tonne ex farm.

The Australian Bureau of Meteorology’s latest monthly climate outlook indicates the current pattern could continue into May before cooler temperatures arrive in June.

The unseasonably warm temperatures, which has toppled temperature records in Adelaide, Sydney and many regional towns in south eastern Australia, appears to have been driven by high ocean temperatures and weaker prevailing winds.

The rainfall outlook for May is neutral, with no strong shift in the underlying climatic patterns that appear to be driving the current hot and dry pattern dominating weather patterns through much of Australia.

It’s not until June, does the Bureau’s seasonal outlook weather model show an easing from the hotter than normal temperatures and a shift to improved rainfall across Queensland and northern NSW.

Grain markets also act as a good barometer of the prevailing weather conditions and the sentiment for a change.

And grain prices continue to press higher.

Sorghum values jumped by $5 a tonne last week to $347/t delivered Brisbane.

The current Brisbane sorghum values are approaching the highs seen in 2014 when Chinese first emerged as a buyers of Queensland sorghum for alcohol. Newcastle sorghum was steady at $335/t.

It was a topsy-turvy week for the United States wheat futures which rallied sharply early in the week after weekend temperatures plummeted to well below freezing which is expected to result in some winter kill losses in parts of the hard red wheat wheat crop. A further deterioration in the wheat crop conditions, which are the lowest in more than two decades, was also supportive.

Wheat crop conditions in the US are the lowest in more than two decades, which lends support.

The market gave back these gains in the later part of the week as forecasters added rain for the driest parts of the hard red wheat crop.

In its monthly world supply and demand assessment, the USDA raised world wheat ending stocks by a further two million tonnes to 271 million tonnes.

In a familiar pattern, the USDA again raised its forecast for Russian wheat exports by 1 million tonnes to 38.5 million tonnes. Russia’s 2017-18 wheat exports are now expected to exceed last year’s record exports by more than 10 million tonnes.

Australia’s 2017-18 wheat exports were left unchanged at 16 million tonnes, according to the USDA report.

The USDA will release its first detailed forecasts for the 2018-19 world wheat crop, which is expected to show the first annual decline in global production in six seasons.

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