The day ahead

Weather – Clear skies across Australia will allow Australian harvest to progress. There will be only a small amount of harvest left to complete post Christmas, a stark difference to last year. Global weather is nothing short of boring. Nothing market moving.

Markets – Down day. With the exception of Feeder Cattle and Soybean Meal, the Ag complex took a hit. AUD also lost ground which will stem the bleeding on flat price.

Australian day ahead – Given offshore moves, I would imagine the local market will be a little defensive. The AUD will add some support – worth watching some delivered markets with some trade shorts popping up.

Offshore

Black Sea market analyst Sovecon reduced its forecast of the 2025 Russian wheat crop by 3Mt to 78.7Mt indicating the current crop conditions are the worst in decades, in particular winter wheat, which was down 3.6Mt. It also indicated it felt the reductions were not being priced into the market. 

Matif wheat has been the focus of the fundamentals traders. The combination of Russian quotas for current crop and terrible conditions for new crop means that the French export path needs to step up. The fact that the speculator has been holding an historically record short has been somewhat baffling. It does feel like Matif has woken up, however, with last night’s intraday move the highest since Oct. I was super impressed for how easily the spec short rolled out of the Dec short position into the March, a little too easily. 

Soybeans hit an 8-week low as South American weather went from good to amazing. There is no doubt the market remains cautious about the impending beginning of the Trump presidency given the reliance of the market on Chinese demand.  

China’s DCE corn market had another down day and was within sight of the recent low made earlier in the month.

CME wheat/corn price differential made a fresh low to about a dollar a bushel. Click expand

Meanwhile, the tightness of the US balance sheet has seen CME corn grind higher over the month, the March contract now approaching the 200-day moving average. Maybe more interesting is the fresh low made in wheat versus corn spread to about US$1/bu. Reports that HRW wheat is trading at around 80-90pc of corn in the physical market should, over time, increase the feeding in the wheat balance sheet.