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 12th April, 2019.
The next update will be on Friday 26th April, 2019. Direct links to reports on each dairy region immediately follow this international and national summary for grain.
Driving Prices Up
Recently snowstorms and wetter than usual conditions across the northern US Plains has not led to a firmer tone in CBOT wheat markets. However, MGEX wheat futures have seen a firmer tone as the increased snowfall and rainfall will most likely lead to a delay in spring wheat futures, this has not been reflected in CBOT wheat futures, but this may occur in the future.
- The US and China continue to discuss their trade agreement and reportedly are close to signing off on said agreement. Late last week this led to a slightly firmer tone in CBOT wheat market and broader CBOT futures, see Global Trade News for more information.
- Globally it is expected that there may be an increase in the demand for wheat and if this includes US wheat this may push CBOT prices up.
- Looking ahead, US markets are beginning to become more weather driven as winter wheat harvest approaches and spring planting begins later this month.
Driving Prices Down
Recently the USDA released their USDA World Agricultural Supply and Demand Estimates (WASDE) report with the report being relatively uneventful this was reflected in CBOT and offshore market moves.
- World wheat end stocks were approximately 5Mt ahead of market expectations, this did not see a lot of activity in CBOT wheat markets. Next month’s USDA WASDE is expected to promote a higher level of volatility in offshore markets as there will be updated crop progress and harvest in the US as well as greater understanding of Australian crop outlook and South American 2018/19 production.
- The most recent USDA crop progress report pegged 60% of US winter wheat to be at good to excellent condition (up 4% week on week) this led to softer CBOT wheat markets.
Global Trade News
With the current trade war having dragged on for almost a year the US and China are close to an agreement, it was announced by the US Government that the two countries are having very productive conversations. However, offshore markets are not holding their breath as weather is the main factor for CBOT futures currently.
- If China reach a deal with the US it is expected that CBOT and offshore futures may be able to find a direction, however there is also speculation that the announcement will create a higher level of volatility.
- Locally, there is still a focus on the amount of rainfall in order to boost soil moisture levels before the traditional planting date of ANZAC Day.
- Prices have been relatively flat as planting has begun for the majority of southern growing regions, whilst there is still need for further rainfall in order to provide confidence for the season ahead.
- Grain predominantly for feed continues to be transported from Western Australia and occasionally South Australia to the east coast. This week there have been shipments of barley to the Brisbane port and wheat to the Melbourne port.
- Further rainfall is needed in order to boost soil moisture for crops in the coming year, however it would also promote some pasture growth and increase confidence of farmers carry livestock throughout winter.
Price change in table below reflects moves since previous report (5th April, 2019)