Will the market go back to a normal season?

Will the market go back to a normal season?


Grains
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We've had supply chains completely turned on their head on the east coast, and grain pricing and flowing in volumes we've rarely, if ever, seen before.

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One often hears that the only constant in life is change.

The same can be said for grain markets. In the past three years we've recorded the biggest national crop on record, to some of the smallest regional crops on record.

We've had supply chains completely turned on their head on the east coast, and grain pricing and flowing in volumes we've rarely, if ever, seen before.

Does the east coast market ever go back to a normal season? I guess that depends what you classify as a normal season!

Needless to say, the landscape through our part of the grain belt has changed dramatically in recent times and will continue to do so.

Add to this, the exponential growth in on-farm storage has changed the way the market behaves, even though we expect this growth to slow in coming years.

Local markets have done or are beginning to do what they needed to. Old crop canola is trading at full carry to new crop which has stemmed a fair amount of grower selling. While the wheat markets continue to remain inverted trying to pry out any remining old crop from the grower's hands.

For those carrying old crop, one must be cognisant that eventually these markets will converge. With that in mind, wheat appears the better sell today.

Barley remains a tale of two woes today with the old crop market on fire due to strong demand from the domestic feed sector and the new crop, quite the opposite.

The forecast carry-out for feed grains into next year looks heavy without a significant increase in export demand and today that bid needs to come from China.

In global markets, all eyes are on US corn as it is largely what is driving the price of US wheat. You may recall the record-breaking wet weather much of the US corn belt endured during planting which has now been hit with immense heat during the key pollination period.

There are many questions that remain around that crop, firstly with regard to how many acres were planted, or more importantly, didn't get planted.

And secondly, how much damage the recent heat has done to the crop. It will take some time for these factors to be realised and the outcome could provide the impetus for a sizeable rally in that market.

The next USDA report is scheduled for August 12.

Usually at this time of year Russia sells a large portion of its crop off the header which weighs heavily on global prices. It seems this has not been the case this year, possibly due to a better quality crop encouraging the Russian farmer to wait for price premiums.

It has kept global wheat markets bid and meant Australia connected on some export business into the Philippines during the past week, stopping the slide in Australian old crop prices.

Still, the Russian farmer should be mindful of a big Argentine wheat crop.

Wheat hectares in Argentina are up year on year, and soil moisture levels are reported as been generally good.

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