The day ahead
Weather – Pretty decent run of weather globally. Nothing market driving at the moment. The east coast of Australia is set for a decent drink with the GFS model building as much as 125mm for the Liverpool Plains. European model showing about half of that..
Markets – The bleed. US wheat futures are now 3.5-5 percent lower for the week, partly due to the near ideal conditions through the winter crop belt. From an Aussie perspective, the AUD is providing meaningful relief, trading within spitting distance of a 0.64 handle last night. Seems every time Trump posts a new clip outlining his next plan the AUD drops another 25 points.
Australian day ahead – Mixed bag – we are close to pricing into the export path but not with any decent margin. Another day, another round of speculation as to what happens in Russia/Ukraine pace. Reports that Morocco has bought 10-12 cargoes from Germany, the Baltic and France adds to the tightening argument. wheat softer, canola unchanged is my guess.
Offshore
Markets took a breather last night post a solid week of equity and USD gains. Some comments by Federal Reserve Bank of Richmond Thomas Barkin also prompted people to take some time to assess what’s going on. Mr Barkin outlined two possible outcomes for the economy, one being increased activity as the election fears fade, the other being increased layoff and margin compression – but indicated that the Fed was in a good position to handle both scenarios.
Crude is also at some crossroads. Scheduled OPEC increases along with a lacklustre China have been the force behind the sellers. On the flip side, potential increased restriction on Iran and subsequently lower crude output have keep the market interested. Donald Trump has also indicated that Marco Rubio may become his Secretary of State. Mr Rubio is on record with his desire to obliterate Hamas and hold Iran responsible for their support to both Hamas and Hezbollah.
US wheat conditions predictably improved post some exceptional weather in the US. Our crop condition and progress report will be out shortly.
Soybean oil’s stellar run came to an end last night after Donald Trump announced that Lee Zeldin will be the head of the EPA. The market is concerned that Zeldin’s desire to roll back regulations would negatively impact the mandates associated with the Renewable Fuel Standard, although this remains unclear.
RFK Jr continues to make waves with his scathing assessment of the FDA. He has indicated he will be firing whole divisions when he gets the first opportunity along with changing the approach to ultra processed food.
Australia
Canola values were unchanged yesterday in Western Australia at A$890 for conventional and $790 for GM. Barley bids were around $325, with the spread to malt now +$35, with bids around $360, and reports of low malt yields as harvest progresses. In the east of Australia, canola was bid around $820 for conventional, with the spread to GM around $65-$70. Wheat and barley were up $2.
There were some big falls for Darling Downs yesterday, up to 50mm, with most areas getting at least 15mm, setting up what looks to be a big sorghum crop. Isolated parts of South Australia’s mid-north received up to 25mm. The next 8 days look wet for most cropping regions in WA, NSW, VIC, and Qld; what this means for harvest and quality will be interesting.
Australian wheat is starting to price into Southeast Asia, with Vietnam and Indonesia shifting away from Russian imports, helping make up for China’s slow demand, with only 300-400kt of Aussie wheat destined for China for the marketing year.
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