All about the national and international grain market and how grain contributes to farm inputs and costs.
International and national summary
National background comments: report for the week ending 11th October, 2019.
The next update will be on Friday 25th October, 2019. Direct links to reports on each dairy region immediately follow this international and national summary for grain.
Driving Prices Up
CBOT wheat futures have remained on a steady upward trajectory over most of the past month.
- This week concerns about how unseasonably cold weather in spring wheat areas on the US Northern Plains has led to a firmer tone for US wheat values, with the most recent USDA crop progress report showing that around 10% of the spring wheat crop is yet to be harvested.
- Further south, concerns about the impact of forecast freezing temperatures on US winter wheat crops which have recently been planted and emerged have also supported CBOT and KBOT wheat futures.
Driving Prices Down
The US government has recently announced its updated biofuels policy. Although this policy does mandate that biofuel targets will be maintained into 2020, it was not clear how the current system of granting some smaller processers exemptions would be dealt with/changed.
- With biofuel demand remaining a key driver of CBOT markets, CBOT corn futures moved backwards in response to this news.
- The Russian agriculture ministry has also raised their estimate of Russian wheat production a touch, with CBOT wheat futures coming under some slight pressure following its release.
Global Trade News
The latest developments in the US/China trade war has seen talks between the US and China commence in Washington this week.
- Leading up to this, news that Chinese firms had made additional purchases of US soybeans and that China was prepared to commit to the purchase of an additional 10 billion dollars of US agricultural products supported CBOT markets at different times.
- The results of the latest GASC tender again showed Ukrainian and Russian wheat winning business, however the 1% week on week price increase from the previous report did somewhat reaffirm/validate the recent price support seen in CBOT wheat futures.
- However, the prices at which this business was won does continue to confirm that wheat from other origins, such as the US and Australia, remains priced above levels which would see it win business into price sensitive markets.
- Harvest has begun for most states with Queensland and Nth NSW well on their way whilst WA received their first load of grain into Geraldton last week.
- Locally there has been a lack of rainfall throughout September for Western Australia, some areas of Vic and SA. This has led to a decrease in the production outlook with a few areas on a knife’s edge as to what production will be.
- If there is some rainfall in the coming month this will support growth and yields for Victoria, SA and WA, the three states where most grain will be produced.
- Grain markets have been relatively steady to slightly stronger in the past week.
- Looking ahead, a level of weakness is expected to enter domestic markets as harvest heats up for the southern, central and western states.
Price change in table below reflects moves since previous report (4th October, 2019)