Day ahead 

Weather: Domestically a push today holds the key for Vic while SA is mixed. Offshore weather is slightly negative for wheat production in Canada, Argentina and in the spring wheat areas of Russia. 

Markets: There is heaviness in market sentiment. The rise of the MATIF wheat market, and later retracement despite the Odessa attack sucked the life out of the wheat market. Potential for continued firming of the AUD remains a key risk to the Australian market. 

Australian day ahead: Given moves offshore, we expect wheat bids to be a little defensive while canola should firm both east and west.

International

Algorithms trading wheat are using war events as a buy/sell signal. On receiving news of infrastructure damage markets were bought, then sold 6 hours later and took the rest of the day off.  The Louis Dreyfus terminal in Odesa was hit and though the terminal suffered minimal damage, the Chicago market spiked. When the movement in the Matif market started to bleed out, Chicago followed lower too.  

Weather forecasters are predicting more rain for Russian spring wheat areas and slightly less for the Canadian spring wheat belt. The dry continues in Argentina after a solid round of frosts.   

Vegetable oil markets have witnessed the soybean oil price decline since the beginning of July amid conditions of US crop improvement and practically non-existent demand. Technical factors are creating an interesting day for the Australian dollar presently wedged between the 50-day and 100-day moving averages. This week’s data, which was led by the better than anticipated record Australian employment participation rate, added support but some poor housing data in the China will continue to provide headwinds for sustained rallies. 

International Grains Council adjusted global wheat stocks from 269Mt to 266Mt. EU wheat dropped 3.9Mt, mainly in France.

Australia

The much needed pattern moved its way through SA last night with mixed results. The Adelaide Plains welcomed over 20mm while Eyre Peninsula and SA Mallee received about 5mm. The pattern is moving across Vic today so falls will be monitored closely. Hot and windy conditions yesterday have added some focus to this pattern. The BOM 3-month outlook also is somewhat at odds with some of the “wetter back end” talk of the last few months.  

Values were slightly firmer through Vic over the last few days but with little in the way of volume as the market waits for this latest pattern. New crop canola bids in the west recovered yesterday to $770/t FIS, with the spread to GM unchanged at a $70/t discount. New crop wheat remained around $370/t and feed barley also steady at $320/t.  

The east coast market saw similar moves with new crop canola bids up $15/t at $700/t. The ASX Jan 25 wheat contract ended the day up $2/t at $325/t.