Canola continued slightly firmer while the softening in wheat and corn became more severe; wheat fell 2pc to 3pc, corn 1pc. US dollar strengthened.

International

In the wheat pits Chicago settled down -26.5 usc/bu closing at 748.5usc/bu, Kansas was -20 usc/bu lower to settle at 729.25usc/bu, while Minni softened -19.5 usc/bu to go out at 907.5usc/bu. Corn fell -5.25 usc/bu to go out at 563.5usc/bu while Beans were down -6.75 usc/bu to settle at 1361.5usc/bu WCE Canola rallied 5.9 CAD/mt closing at 918.3CAD/mt with Matif Canola finishing higher by 0.75 Eur/mt. In outside markets the Dow Jones fell -282.12 points, Crude was down -0.69 bbl the Aussie was -0.0086 points lower to settle at 0.72492, the CAD rallied 0.0056 while the EUR fell -0.0068

Sentiment Shift

Wheat was under pressure out of the gate today amid a barrage of outside market noise. The ripples from the USDA report still warrant debate, the main focus being the Russian production number. Wires debate the fact the USDA may have gone a little hard a little early but, with domestic values still in the stratosphere, it is hard to not have some decent adjustments to earlier estimates. The best indicator we have of fair value remains Russia and, predictably, they came in after the lower finish. All eyes will be on the offer line up.

Market attention is always a fascinating thing. Yesterday it was all about French heat and subsequent rainfall turning their wheat quality into a liquorice all sorts. Today it is all about how the German crop missed the worst of it and that there are only some slight cuts to total production.

Corn will get soundbites from the ProFarmer tour which pegged South Dakota corn yield at 151.5bu/ac, almost 28bu/ac lower than last year and a decent cut to the 170.4bu/ac average. On the flip side Ohio was pegged at 185.1bu/ac vs last year’s 167.7bu/ac. These examples are further evidence of the mixed bag this year will undoubtedly be. The national guestimate of 175.5bu/ac seems reasonable today.

We are still in a weather market. The rain expected this weekend seems a lock but that was also the case for Iowa and Minnesota with disappointing results to date.

Australia

The Australian dollar, without fanfare, fell through the US$0.73 support level as the US dollar found solid buying. This comes on the back of the RBA reiterating that there won’t be a rate hike before 2024. The east coast Australian lockdown certainly had not provided any incentive to change the economic outlook. Technically, the AUD looks heavy but oversold and  0.7210 marks the immediate support level.

Local conditions see more rainfall for the southern grainbelt. It could be argued it is getting a little damp and cuts to canola yield could be expected in these areas. From a Victorian perspective, at least, the swings and roundabouts see increased yield in the Wimmera district.

Domestic new crop pricing is far from normal; Melbourne January delivered pricing is quoted around the $360/t level while Darling Downs would be circa $340/t.

Debate is shifting from export parity and the compelling paper margins executing southern Australia into Asian consumers versus the potential weight of grower selling through the harvest window. Transport problems, potential mice issues and generally good pricing are all supporting ideas the grower meets the market. On the flip side the Asian flour miller has had two years of waiting for the Russian cheap grain to come, which is becoming more unlikely.

Source: Lachstock Consulting