The July US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) were released last week and the data fell in-line with the market's expectations, following-on from the June stocks and acreage report.
Overall, the WASDE report's global wheat outlook consisted of lower supply, less consumption, a decrease in trade and reduced stocks.
Global wheat supply estimates were reduced by 2.85 million tonnes, led by reductions in the European Union of 1.5 million tonnes and - at 139.5 million tonnes - this would be the smallest EU wheat crop since 2012-13.
Russian wheat production was also forecast to fall to 76.5 million tonnes. But this would be offset by a reduction in global ending stocks of 1.25 million tonnes, on the back of reduced trade expectations.
Of note, ending stocks in China were reported at 51.5 per cent of total world wheat stocks.
Australian production estimates remained unchanged at 26 million tonnes - aligning closely with domestic trade expectations. Given the season outlook, this volume is perhaps likely to show upside in the coming months.
With global supply and demand 'sitting comfortable' - and no major issues presenting today - I suspect we will need to see some sort of cut to production to create a more supportive market.
The CBOT Dec 20 contract is trading up by US43 cents per bushel for July, at US530c/bu - or $280 per tonne.
Although we have seen a rally in global futures, the favorable domestic conditions have seen our basis pull back between $10-$14/t across all east coast port zones.
Its been a while since domestic barley markets have been given a mention and - to put it politely - the market still remains dull.
We've moved through the Chinese tariff saga to a price level where we are competitive to sell to the Middle East from December onward.
But for our current crop, we remain a high-priced island - as the grower isn't letting go the last of the carryout into the inverse - so small tonnes have been trading in a very illiquid market.
The season is setting-up nicely across much of the country.
Western Australia is set to receive a good rain this week to lift the crop rating, so no production issues thus far.
The question for next season is whether we will be able to sell enough into Saudi Arabia, for which we will have to remain cheap enough to price through to the front half of the year 2021.
If we don't have the volume, there isn't much hope for sustained upside in prices with what we can see today.
It will be up to the grower to carry it if we can not price the exports we need to move the crop.
As we now enter the middle of July, with the lion's share of the eastern cropping belt receiving not just timely but consistent widespread precipitation, it appears that confidence has been restored following-on from consecutive droughts.
Grower selling has increased, with current new crop Port Kembla wheat pricing ranging from $295-310/t track over the previous fortnight - presenting great opportunity for growers to start chipping-away and ensuring harvest cashflow is in order.
New Crop barley remains dormant and canola markets have been relatively active at site prices of about $550/t.