International

One step forward, two steps back. US futures gave back Fridays’ rally and then some. Good old fashioned harvest pressure is driving the bus, and the buyer is absent. In fact, the only production flag today is the EU with the French crop downgraded again last week. The French harvest is 1pc done but conditions went down 2pc and are rated 58pc good-to-excellent. Winter barley is 33pc harvested and crop condition rating was reduced 6pc. Aside from the French progress, there really isn’t anything to get excited about. For the moment at least, the fact the global stocks-to-use is back to 2007/08 levels doesn’t matter. Now, it is not all doom and gloom – the US has had 3 consecutive weeks of solid export sales which adds some weight to the idea that the US has fallen enough. Last night’s clean out did feel like broad brushed commodity selling with my screen red across the board.  

The USDA will publish its July WASDE on Friday. Some of the key numbers to look out for are: 

• Corn – yield predicted to be unchanged, US ending stocks expected to increase slightly, as are global ending stocks. 
• Soybeans – market looking for a slightly tighter US and global balance sheet but only small changes. 
• Wheat – heavier – US spring should increase, and global numbers look set to increase moderately. 

The CFTC report was delayed by a day due to the 4th of July holiday. Chicago wheat saw only moderate changes for the week but, when looking at the spec position (managed money and other re-portables) it has only been shorter at this time of year once since at least 2005/06. Corn is a massive stand out, massively short, not only for this time of year but almost a record. Beans are a similar story. 

The Australia dollar held on to last week’s gains and now has arguably broken out of down-trend in place since early 2021. The divergence in monetary policy is getting more pronounced with the inflation miss in June and while the RBA did its best to paint both sides of the rate argument, the forward curve has a 60pc chance of a rate increase in September. Australian jobs data for June (released on 18 July) and quarterly inflation (31 July) will be the drivers. Meanwhile, many western central banks are either cutting or looking at easing. Futures markets have priced in two cuts by the US Fed Reserve, starting in November. Given disappointing jobs data on Friday, this may happen in September. The main headwind for the AUD is the underperformance of China, partially reflected in the slide in iron ore prices. Chinese iron ore inventories at Chinese ports are sitting at two-year highs, driven by the slide in steel production, down 9.5pc month-on-month in June.

Australia

More of the same in the west as wheat and barley values trade sideways-to-lower and canola opened the week stronger. 

Fresh export demand is limited with just the regular market of Japan featuring for wheat and barley. 

Canola (CAN) bids were up A$14/t to $834/t FIS yesterday. New season wheat bids remain around $375-378/t and feed barley $330/t, both FIS. 

In the east, this week’s story is in the canola move which continues its trajectory upward for both current and new crop. 

A light day yesterday on Clear Grain Exchange with most trades in the west (canola – under 600t), and 100t of BAR in the Geelong port zone trading at $294/t. 

Rain in the east seems to have missed most cropping areas over the last week. Variable falls in SA and WA with some areas receiving up to 50mm whilst others received less than 5mm.