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 14th February, 2020.
The next update will be on Friday 28th February, 2020. Direct links to reports on each dairy region immediately follow this international and national summary for grain.
Driving Prices Up
At different times over the past week, speculative buying has brought a touch of firmness to CBOT markets, with wheat markets looking to regain some of their recent losses.
- A predicted pickup in US export pace for corn and soybeans, in this month’s USDA World Agricultural Supply and Demand Estimates (WASDE) report supported CBOT corn and soybean futures. Despite the otherwise negative market reaction to the WASDE report.
- Concerns about the impact of hotter and drier than usual conditions in Russia this year also remain supportive of world wheat prices.
- Russian growers are starting to plant their spring crops earlier than usual.
Driving Prices Down
This month’s USDA WASDE report failed to inject any real life into offshore grain markets, with CBOT markets drifting lower as a result.
- The marginal decline in world wheat end stocks that was in this report failed to meet market expectations (albeit of a slender amount; <1%) and this saw CBOT wheat futures move lower in response to the release of this report.
- The Chinese coronavirus outbreak also continues to bring a softer tone to world grain prices, given (among other things) concerns about the impact on Chinese demand and US/China trade flows.
- Currency markets are also feeling the effects of the outbreak, with the Australian dollar currently hovering around the 67USc level.
- This pressure on the Australian dollar has also worked to balance offshore weakness in local prices.
Global Trade News
The results of the most recent GASC (Egyptian) wheat tender showed Russian and Romanian wheat winning business at prices around 2.5% lower than the previous tender results announced at the end of January.
- Data indicates that wheat from exporters with more expensive grain, such as Australia, Canada and the US has won business recently.
- This business is largely from countries which are known to have more inflexible/inelastic demand and are willing to pay above where the world market might be.
- Across the country, grain prices have again moved lower over the past week, with improved sentiment around pasture growth and this year’s crop driving this trend.
- In a number of instances, this has seen a pullback in both buyer and seller engagement.
- The premiums which local prices have been trading above offshore prices have remained relatively steady, with offshore prices seemingly doing enough to drive local markets lower.
- Should offshore prices remain steady in the short term, we may see local premiums start to ease.
Price change in table below reflects moves since previous report (7th February, 2020)