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 29th May, 2020.
The next update will be on Friday 5th June, 2020. Direct links to reports on each dairy region immediately follow this international and national summary for grain.
Driving Prices Up
Wet weather in the US in recent weeks, and more forecast for the next week, has put some areas in the Midwest on alert for flooding. Nebraska and Arkansas are the worst affected areas, with many other areas saturated and not requiring much additional rainfall before floods are triggered.
- The prospect of some spring crops being unable to be planted, as a result of wet weather, has brought a firmer tone to CBOT markets.
- The influential Kansas crop tour, albeit in a virtual form this year, concluded last week. The resulting winter wheat production forecast is 7 per cent blow the current production forecast released by the USDA.
- With Brazil fast becoming the new epicentre for COVID-19, concerns are growing around the impacts that the spread of the virus will have on the country’s ability to export (see trade news). CBOT markets, as a result, moved higher as buyers would potentially look to US agricultural products to fill the shortfall if Brazil has difficulty exporting.
- Despite some rainfall in the Black sea region this last week, wheat production for Russia and Ukraine is still expected to decrease by 7 per cent year-on-year.
Driving Prices Down
This week saw the US winter wheat crop condition increase by 2 per cent, with 54 per cent of the crop rated good to excellent. This season’s winter wheat crop condition is currently 8 per cent above the five-year average, which placed downwards pressure on CBOT wheat values.
- Despite wet weather causing some issues planting the upcoming crop and a slight uptick in ethanol demand, US corn ending stocks are expected to remain at high levels for the 2020/21 season. With CBOT corn values likely to remain under pressure, this could spill over into other CBOT markets.
- After a period of dry weather, some rainfall in Europe and the Black sea region has also placed downwards pressure on CBOT wheat markets.
Global Trade News
Brazil is currently sitting second in the world, behind the US, as the worst outbreak of COVID-19, which has the trade questioning their ability to reach their typical export capacity. The US is planning to ban entry of a majority of non-US citizens from Brazil from the end of this week.
- Tension in the relationship between China and the US continues to cause speculation around whether the phase one agreement will be honoured. As the US joins calls for an investigation into the origins of COVID-19, there was some concern in the trade that China would pull out of the phase one agreement. Concerns were tempered this week, however, as China made further purchases of US soybeans.
- The Bureau of Meteorology announced that a large percentage of the grain growing regions of Australia are expected to have a wetter than average winter. This will further support, what has already been, the best start to the season in Victoria seen in a number of years. Southern Queensland and a majority of South Australia also has had a good start to the season.
- Following the fall in values following the announcement of Chinese tariffs, barley prices have firmed in the last week. Conversely, wheat markets have weakened across most of the country, as the significant discount of feed barley has encouraged some elastic demand to move away from wheat to feed barley.
Price change in table below reflects moves since previous report (15th May, 2020)