Futures saw mixed moves on Monday both continental and North American;
The markets have a lot to digest at the moment. Tariff disputes on several fronts, excessive moisture and livestock disease make projecting balances amazingly difficult. The function of the market is to find a price that balances supply and demand so, understandably, markets are volatile. Last night we experienced a large range before settling close to unchanged – that fact that we tested the lows and bounced ahead of the data contained in the planting pace and conditions report, released after the market close, is significant. There were some interesting numbers in the release; winter wheat conditions were unchanged, corn planting came in smack on the trades pre-report guess of 83pc while beans disappointed with only 60pc planted vs trade guess of 66pc. A mixed bag but, the planting pace numbers indicate there is 15.8m acs of corn that has not been planted. Has the market built in enough risk premium to compensate for this production loss. The USDA will go someway to either confirming or lagging this when they release their June crop report tonight. This year is one out of the box – there is not a year to compare – the closest would be 1995 – but once again, not the same. This year the USDA got on the front foot with changes between the May and June report – I do think they view things differently now vs then. Farming efficiencies and seed technology make it a hard one to compare – tonight will tell.
Great rains in WA over the weekend have largely covered the whole belt with the exception of parts of Esperance port zone. It’s hard to find a year with such competing influences on price. A lack of rain in the north, great rains in the south, corn problems in the US, ample global wheat balances but more than half of this sitting in China, trade barneys going on everywhere. Ultimately production estimates in Australia have firmed over the last week and while we will once again be looking at a relocation market – ie south to north we should have enough production to satisfy demand – its now up to price to rebalance location.