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 24th January, 2020.
The next update will be on Friday 31st January, 2020. Direct links to reports on each dairy region immediately follow this international and national summary for grain.
Driving Prices Up
CBOT wheat has tracked slightly higher in the last week.
- Attention has begun to turn to the upcoming EU and Russian winter crop. The EU and Russia has been experiencing a warmer than usual winter which, ultimately, has led to less snow cover. If the warmer conditions and lower snowfall continue, the EU and Russian winter wheat crop in these areas could experience high levels of winter kill.
- In the US, the upcoming winter wheat crop is expected to have one of the lowest total planted acres in the last century, which is likely to lead to a lower production year on year.
- Worker strikes at French ports (see trade news) has halted its exports, which has led to other countries filling shorts from grain of different origins. This has provided some support to international grain prices.
- Speculation around a Russian cap on grain exports (see trade news) has also provided a level of support to CBOT wheat prices, however this cap is unlikely to have a material effect on grain prices this year even if it is implemented.
Driving Prices Down
Little light has been shed on the exact agricultural commodities that China will be buying as part of the phase one trade deal between the US and China in the last week. As a result, some downwards pressure has been placed on CBOT futures markets.
- Significant price rises in the last few weeks in CBOT wheat has seen some technical selling and profit taking recently, this has caused some softness in CBOT wheat markets.
- If conditions improve across the EU and Russia and more there is an increase in snowfall, this would place the crop in a better position and place some downwards pressure on global wheat prices.
Global Trade News
Developments and trade activity between China and the US will continue to be front of mind for global markets, especially CBOT futures. The deal between the two will mean that China will “strive” to purchase US$40 billion of agricultural goods including meat, grains and oilseeds in the coming two years.
- Markets continue to await physical sales of agricultural goods as recently there has been a lack of evidence supporting the specifics of the deal. The initial stage of the deal takes effect 30 days after signing.
- Recent industrial action in France has led to a delay in French export pace. Despite rail and ports being open temporarily there are further strikes forecast for the coming week, this has already led to year and a one and a half year high for EU wheat futures.
- Rainfall across the east coast of Australia has failed to soften grain prices over the last week.
- The rainfall is too late to improve summer crop prospects, which will cause grain to continue to be transported to the northern grain growing states to fill feed demand.
- Grain markets in southern Queensland and northern New South Wales continue to reflect the price movements seen at South Australian and West Australian ports.
- Further forecast rainfall over the weekend could see grain prices soften at the beginning of next week.
Price change in table below reflects moves since previous report (17th January, 2020)