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 1st November, 2019.
The next update will be on Friday 15th November, 2019. Direct links to reports on each dairy region immediately follow this international and national summary for grain.
Driving Prices Up
Speculation about when the US and China may or may not make a trade deal has pushed CBOT markets in either direction over the past week.
- Apart from this, little support for CBOT wheat and corn futures has been seen over the past week.
- One survey has found that the US winter wheat area could be the lowest in 110 years, with growers there responding to a multi-year trend of increased supply and pressure on prices.
Driving Prices Down
With little fresh news in terms of supply and demand fundamentals CBOT markets have generally trended lower over the past week.
- Some drier weather in the US Mid-West has seen a pick-up in harvest pace on corn and soybean crops, adding to the softer tone in CBOT markets.
- However, the quality rating and overall harvest progress of these crops continue to lag behind longer term averages.
Global Trade News
The results of the latest GASC (Egyptian) wheat tender saw Ukrainian, Romanian and French wheat winning business over grain from other origins including the US and Russia.
- The rise in the value of the Russian rouble seen this year has impacted on the competitiveness of Russian wheat in export markets, with Russian wheat exports currently 11% below year ago levels.
- While Russian wheat does generally firm in price and lose competitiveness in export markets, this usually doesn’t happen until around January.
- Following recent elections in Argentina the victorious Peronist Party is expected to re-introduce export taxes on wheat, corn and soybeans.
- With Argentinian grain having emerged as more of a competitor to Australia in recent years, this could potentially see some export demand shift to Australian grain and feed exports.
- Warm and dry weather in October on the back of a generally lacklustre year has seen harvest start to ramp up across the country.
- Last season we saw an unprecedented amount of grain move around from WA to the East Coast.
- However, with Victoria having had a better year this year, transshipment is not expected to occur to the same extent as last season.
- With markets now aware that grain can reliably move around in significant volumes it is hard to see markets on the East Coast pricing them selves higher than the cost of grain in WA plus freight.
- Given this, a return to the price highs seen last season remains unlikely.
Price change in table below reflects moves since previous report (25th October, 2019)