International

In other markets Black Sea wheat settled up US$1.50/t. Soybean meal added $14/st while soybean oil closed the week basically unchanged.

Just when you thought it couldn’t get hotter in northern Argentina forecasts built another 3 days in the high 30s-to-low 40s Celcius. The local basis markets took this as reason to build even more premium and away we went. There does look to be some relief in the southern Brazil belt but, for the moment, all eyes are on the Argentine crop and the potential global balance sheet implications.

Rumours that SRW whet may have booked a chunk of business has the market guessing and China destination is a firming favourite.

The investments funds index rebalance is still being worked through. Soybean meal looks to be the big gainer while Arabica coffee should see the index fund exit given the stellar performance last year. Interesting to contemplate whether agricultural commodities can hold capital. Funds that can trade between asset classes such as agriculture, base metals and energy would be forced to reduce length in the agricultural commodities bucket given relative performance.

Canola was one of the more volatile commodities last year. In the March contract the spread between Winnipeg and Matif has recently been pressured and now represents contract lows for the March. This may swing some of the more discretionary hedging to once again look to Matif as the best short although, with balance sheets in EU still painfully tight, it still carries some risk.

Australia

Local wheat markets rounded last week out a fraction softer with grower bids down A$4-5/t and trade wheat markets remained wide bid offer spread. Liquidity struggled for the week with very little activity.

Barley was a touch firmer in places. SA feed barley traded late trade at $300/t port level.

Cash canola bids were a mixed bag with Victoria sites firmer by $5/t, Port Kembla softer and WA values largely unchanged.

Last week again saw some big rainfall totals in eastern Australia. Large parts of NSW received up to 100mm in the latter part of the week. Victoria also received falls of 10-25mm which delayed harvest. The ongoing delay is putting a question mark around the Western Districts wheat quality.