Corn, canola and rapeseed lifted 1pc. Wheat and beans moves saw small, mixed moves.

International

The August US crop production and WASDE reports will be published tonight.

Wheat markets were mixed in the day session around the globe – Chicago ended up unchanged, Kanas down -4cents, Minny down 2.5cents and Matif wheat +€2/t and Russian cash values were a fraction higher again. Corn markets were firmer throughout the day and gained 7cents in the Sep contract and Beans were up 3.25cents in the Nov, all eyes on upcoming report for the market movers. Crude oil prices rose, Brent up 1.5% US$71.69 and WTI to US$69.25/bbl, the Dow and S&P 500 edging to record highs with the Dow up 220 points. AUD is trading at .7369cents, the CAD $1.251 and the EUR $1.174 N.B. The next

USDA WASDE and crop production report will be this Thursday, the 12th of August US time (late evening Aus time)

The calm before the storm. The pre-report markets saw some position trimming ahead of a report that could really do anything.

Every report is important and tonight’s will be no exception. Early in the year it was all about Brazilian corn shortfalls, which pushed the importance back to the US. Subsequent question marks started to be raised regarding the ability of this crop to do the heavy lifting required, so the market pushed some of the onus to the wheat supply/demand equation. More recently more questions are being asked about global wheat production with the US, Canada and now Russia all falling short of their initial targets. So what does the USDA do?

The one relief valve has been the lack of recent demand for US corn. China really shaped the need for increased risk premium in the world corn market by pulling hard on both old and new crop. They have since gone a little quiet which has forced the market to recalculate what fair value is and, ultimately, what bu/ac number is still okay from the US.

The Russian wheat crop debate continues. Russia indicated it wouldn’t restrict grain exports until Feb 15. Post that date the export quota for all grains would be set at 15 million tonnes from Feb 15 to June 30.

The bean balance sheet is extremely sensitive to any yield changes and a good-to-excellent rating of 60 per cent (pc) raises more questions than answers. The 5-yr average for this time of the year sits at 63pc but this time last year we were printing 73pc. Global veg oil demand will keep the crusher full so any incremental export demand will force values higher. South American weather is vitally important to balance the global numbers, especially with reports that Malaysian and Indonesian palm plantations are facing staffing challenges as the COVID-19 Delta variant spreads through the region.

Australia

Local new crop wheat markets firmed across the board yesterday as we saw delivered and track markets up A$5/t. Kwinana zone finished the day bid $355/t FIS APWMG, and over on the east coast, we saw track APW values push upwards to $340/t through Victorian sites. Barley also showed signs of strength with bids up a couple of bucks. WA got to $290/t FIS in the Kwinana zone.

Old crop liquidity continues to leak out through the market, with barley continuing to find a bid through the east coast. The drawing arc for Vic wheat and barley tonnes continues to flow into South Australia to fill domestic demand through Aug-Sep slots.

Canola continues its tear with bids for new crop unchanged to slightly firmer into the domestic crushers. With offshore values up overnight $10-15/t through Winnipeg and Matif support, we see more strength coming into our local market today. However, there are concerns of crop damage from waterlogging through parts of western Victoria and southern WA.

While prospects up in the northern parts of NSW and Southern Queensland are on track for a bumper crop, some of these big bulky wheat and barley crops will need another drink in the near future to maintain potential for what is being reported as the best crops some have seen in a very long time.

Source: Lachstock Consulting