Drier conditions drive grain prices

With a general smorgasbord of inputs to consider it can be hard to pinpoint the exact driver of markets on any given day however, after a relatively sedate couple of months, recent geopolitical and weather concerns were enough to feed the market bulls and push bids higher.

Global currencies have been on the move after any hopes of early interest rate cuts in the US were squashed and with escalating tensions in the Middle East.

Our bids have been supported by the Australian dollar's recent drop to a five-month low helping Aussie grain look more competitive into export homes.

The ongoing Middle East conflict has also led to crude oil supply concerns driving values higher and subsequently dragging often correlated agricultural commodities along for the ride.

Unfortunately, this rally is also likely to result in an increase to farm input costs as diesel and imported goods such as fertiliser and herbicide become more expensive.

Futures markets have rallied as northern hemisphere crop conditions start to come under scrutiny.

US winter wheat conditions are continuing to decline due to ongoing dry conditions particularly in the Southern Plains.

With 56 per cent of the crop recently rated good to excellent the current outlook is much better than recent years, however, concerns are growing that should conditions persist further downgrading will likely be seen.

Below average rainfall in Russia is also drawing plenty of market attention and will be monitored closely in current weeks.

The world's largest wheat exporter is currently experiencing dry conditions in its largest growing region in the south which accounts for more than 40pc of its total crop.

While Russia is still forecasted to produce a massive 93 million tonne wheat crop, analysts recently dropped estimates by one million tonnes with improved weather conditions necessary to maintain the current expectation.

Despite the welcome increase to local bids, Australian growers have been slow to engage the market too heavily with most firmly focused on sowing programs that are underway across the country.

While consistent rainfall has resulted in near perfect planting conditions for most of southern Queensland and NSW.

Farmers in Victoria, South Australia and Western Australia are all eagerly awaiting a proper autumn break to kickstart their 2024 campaigns.

The lack of recent selling engagement is even more understandable considering farmers are commencing dry planting across large portions of the country.

Slow market liquidity is undoubtedly supportive of local bids however, we are likely still a few weeks of dry weather away from our conditions providing significant additional market support.

Weather forecasts will be closely monitored as we find ourselves in a precarious position both locally and abroad.

There is still plenty of time for crops at risk in the US and Black Sea to recover should some rain appear and although far from ideal, local seeding programs will proceed in anticipation of a good soak.

Prices will continue to be guided by these outlooks in the coming weeks, we can only hope that our own prospects improve while values continue to strengthen.