Markets eased overnight

• Chicago May 2024 wheat down US12c/bu to 532.25c/bu;
• Kansas May 2024 wheat down 12.75c/bu to 574.75c/bu;
• Minneapolis May 2024 wheat down 8.25c/bu to 655.25c/bu;
• MATIF wheat May 2024 down €0.75/t to €194/t;
• Corn May 2024 down 7.5c/bu to 433.75c/bu;
• Soybeans May 2024 up 1.5c/bu to 1195.25c/bu;
• Winnipeg canola May 2024 down C$1.80/t to $623.20/t;
• MATIF rapeseed May 2024 down €2.75/t to €437.50/t;
• ASX March 2024 wheat up A$1/t to $318/t;
• ASX May 2024 wheat up A$1.50/t to $321.50/t;
• ASX March 2024 barley unchanged at A$298.50/t;
• ASX May 2024 barley unchanged at A$295/t;
• AUD dollar down 41 points to US$0.6581.

US wheat futures fell as the noise around Chinese wheat cancellations gained momentum. The well publicised reports of SRW cancellations were joined by fresh reports that as much as 1 million tonnes (Mt) of Australian wheat had been cancelled or deferred. While we have no doubt there has been some impact to the Australian program, 1Mt is a difficult number to get to. Remember, the export pace from Australia to China has been impressive. If we look at what we have already shipped and what is sitting on the stem to end of March is circa 3Mt against a full marketing year target of 4.2Mt. 

US data has, once again, pushed rate cuts back down the curve. Retail sales outperformed, up 0.6pc in Feb vs -0.8pc in Jan. Additionally, the Jan print was revised to -1.1pc. While this was below expectations, it supports the view of the Fed Chair Powell who continues to look for greater confidence that inflation is trending lower before they begin cutting rates. The US Producer Price Index (PPI) outperformed expectations, rose in Feb by the most in six months, driven by higher fuel and food costs. However, it wasn’t just energy and food, with core PPI also increasing 2pc year on year. 

A slightly wetter shift in the forecast for Brazil Safrinha corn added to the bearish futures tone overnight. However, the heat is set to intensify over the next week. Meanwhile South Africa will see some rain across the completely parched corn growing areas – unfortunately, this will be too little too late for their ravaged crop. Staying on weather, Pakistan and parts of India are set to get some heat over the next 10 days which will have some limited negative impact on wheat yield. Morocco is also having a shocker with drought right through their wheat crop areas. USDA currently has them pegged for 6.5Mt of imports, a record along with Algeria at 8.3Mt. On the positive side, Russia is looking at milder temps over the next 10 days which will see snowpack melting in both western Russia and the Volga. Turkey, Iraq and Iran are all set to see decent moisture in the next 10 days. 

SRW deliverable stock has seen an unprecedented draw down over the last few weeks. While still in the “normal” range, the break in futures has seemingly drawn inventory to the cash markets. Hard Red Spring deliverable stock remains at an all-time low. 

Australia

Rainfall estimates for WA have backed off a little overnight, although the eight day forecast is still calling for 15-25mm in central cropping regions, mostly in the latter half of the week.

Local barley markets have found a bid while the offer side is somewhat difficult to locate. With hot and dry conditions set to stick around according to the BOM, containment feeding has soaked up some of the length. Interesting to note that WA and SA have shipped or stemmed a little over 80pc of their full marketing year exports to the end of March. The aggressive start to the export program means any discretionary business would need to find the inventory in the Vic market – something not lost on the offer side. 

According to Grains Australia, Australia has exported 222kmt of fabas and broad beans and just over 535kmt of lentils so far this marketing year. The 10-year average for fabas/broadies sits at just under 400kmt while lentils average 668.5kmt. 

The RBA is set to keep its key rate unchanged with a Bloomberg survey still indicating the first cut will come in the second quarter. March 19 will see the next rate announcement with the consensus indicating an unchanged outcome. Feb unemployment data will come out on the 21st which is expected to be slightly lower at 4pc vs 4.1pc last month.