Trade and world markets news

In the afterglow of a lacklustre USDA report the market looked like it was feeling around in the dark, desperately waiting for the next spark to add some light and direction.

In what is a standard response to a government data release, the market now has to reassess risk premium.

If you are looking at a balance sheet like beans for example – does US$9.31/bu cover the market for the what-ifs?

If you lined up all the undefined risks such as China/US relations, South American crop conditions and US new crop planting, and you calculated the best and worst outcomes what would the top and tail be on the market?

It is easy to be “Chicken Little” and assume the sky will always fall in but the exercise is about defining fair value.

On the world trade front Iran apparently signed a memorandum of understanding with Russia and Kazakhstan to import wheat.

This was one of the omissions in the USDA report which has Iran only importing 100,000t, clearly too low.

With Kazakhstan Agriculture ministry announcing they harvested 19.39 million tonnes (Mt) of winter crop vs 22.76Mt the year before it’s safe to assume they will not be the main supplier to Iran. Russia will gladly do the heavy lifting.

Australia

Locally harvest conditions continue to throw up a mixed bag. Fire bans, high winds and cool temperatures have slowed down the rate of harvest across the country.

One positive is that conditions have been ideal for pulse and canola harvesting where this could potentially be 30pc through.

While harvest has been slow, markets have seemed to find some ground for now and some of the nearby harvest slots have firmed.

ASX Jan wheat traded $340/mt yesterday for small volume and barley settled at $272.50/mt for Jan.