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 October, 2018.
The next update will be on Friday 26th October, 2018. Direct links to reports on each dairy region immediately follow this international and national summary for grain.
Driving Prices Up
- Speculation about what might happen to Russia’s export program remains one of the key talking points in offshore wheat markets.
- At present it is believed that Russia will look to impose plant and equipment requirements on export ports, with the view to reducing the number of ports which are able to export grain, following concerns from buyers about the quality/specifications of Russian shipments.
- Any contraction in the supply of grain coming from here is likely to bring some upward price pressure to wheat and other offshore grain markets.
- In the US, rain delays have had some impact on the harvest progress of soybean and, to a lesser extent, corn crops.
- This has seen CBOT corn and soybean markets resist some of the seasonal harvest pressures that we would typically see at this time of the year.
- In Canada, rain and snow have also slowed the harvest of wheat and canola crops, however more favourable weather for harvesting is expected next week.
Driving Prices Down
- In the lead up to this month’s USDA World Supply and Demand Estimates (WASDE) Report offshore markets took on a softer to slightly weaker tone.
- Last month the USDA surprised markets with increases to world corn and wheat end stock, and in the lead up to this report markets were expecting that these 2 key numbers would again show month on month increase, albeit by a marginal amount.
Global Trade News
- This week’s USDA wheat export inspections came in at the upper end of market expectations and showed a 14% week on week and 19% year on year increase.
- For some time, global markets have been looking to these numbers to get an idea about how much the tightening of global grain stocks, which has happened over the past 12 months, will be able to impact global trade flows and prices.
- However, markets will be looking for a more sustained run of increased export pace before offshore grain markets can rally beyond current levels too much.
- After having rallied to record/near record highs this year, rainfall along the east coast has taken some of the heat out of local grain markets over the past week.
- While this rain will not be able to turn around the fortunes of many stressed crops in some areas, including parts of Victoria and South Australia, this rain may help crops hold on for a few more weeks/until harvest.
- With local feed grain demand (much of which is coming from north eastern Australia) continuing to drive the market, more grain market attention is turning to summer crops, including sorghum.
- Average sorghum production would be able to satisfy around 20-30% of feed grain demand in north eastern Australia, so an average or above average sorghum crop may well be able to ease some of the tightness seen in local feed grain markets, at present.
- However, given the dry conditions seen so far this year, growers will probably be wanting to see some meaningful rainfall before they go ahead with planting.
Price change in table below reflects moves since previous report (5th October 2018)