International

The agricultural sector, firming overnight, largely shrugged off weakness across other commodities. Energy is suffering under the wider macro heaviness – high energy, increasing rates, general bearish sentiment.

When the Russia/Ukraine conflict began in February, wheat was the expression of the trade. Speculative money must decide now where to park its cash in the current environment of central banks tightening their screws. Fixed income will certainly attract capital but the fundamental story in agriculture is getting more compelling by the day. Demand is rock solid and there are still some questions over the supply side. It feels already like the Australian supply chain should be fully subscribed for new crop… already

Fresh wheat demand is emerging and it seems, as always, misery likes company. Pakistan is enquiring to buy 0.5Mt wheat. Its government has indicated a need for an additional 3Mt for strategic reserve. While not completely linked, it doesn’t bode well for Indian production estimates which have taken a beating post the extremely hot and dry finish to their wheat crop. Along with Pakistan there is a laundry list of buyers which will give us some indication in Russia’s ability to service this demand.

EU dryness is growing and the situation, though not yet a disaster, is one to watch. The US is still too-wet-too-dry, an interesting situation for the USDA to decipher in tomorrow’s report.

Despite the supportive fundamental backdrop, the USDA report can still disappoint the bulls. Inherently the USDA is conservative, so there is a decent chance the numbers in the WASDE will not reflect the global opinion. Corn is fascinating – planting is slow, but there is still time, and all problems are solved if you put in a yield of 181bu/ac.

Australia

Local markets were relatively unchanged yesterday. Kwinana ASW1 traded at $403/t FIS while eastern Australian protein wheat is still well bid. Barley is hard to find up north as delivered Downs markets continue to firm and prompt demand picks up with buyers bidding $420-plus/t.

Winter crop planting is progressing well in NSW with an estimated 90pc to 100pc of the canola crop now in the ground. Parts of the central west have not been able to get all intended area in as it has been too wet and a swing into wheat or barley is likely for some as time slips away and the rain keeps on coming. In northern and northwestern NSW wheat and barley are 80pc to 90pc sown.  Southern areas are anywhere from 30pc to 70pc through their programs. The Victorian canola plant is mostly in the ground into an excellent moisture profile in most regions. Victorian wheat and barley also are progressing well with most plantings over the half way mark. Although SA has been dry it is not unusual for this time of year and dry sowing of crops is well underway.

The forecast hasn’t changed much – NSW and Queensland still are looking very wet. WA looks to be in for more widespread falls than earlier predicted. Victoria looks set to receive a little less and SA still is looking relatively dry.