International

Nearly 1 billion people are heading to the polls in India over the next 6 weeks as Prime Minister Narendra Modi tries to return for his rare third term. Amazingly, this election will see around 12% of the world’s population voting in one election. This is one of 64 countries (plus the EU) that will hold elections this calendar year. 

Wheat managed to grind out a mixed result amid conjecture over the production prospects of the US, EU and Russia. EU freeze risk has increased slightly overnight, especially through France and Germany. Conversely, Russian winter and spring wheat areas will be blasted with higher temps and lower rainfall. It is worth noting however that there is a big spread between the GFS and Euro weather models. 

China has had the hammer down on wheat imports, completing its second biggest import month at 1.78 million tonnes (Mt) in March. Including the current stem, Lachstock has the Oct-May China program ex Australia at 3.7Mt vs our full year estimate of 4.3Mt. According to the USDA, China holds 51pc of global wheat ending stocks. 

“Sticky inflation” has become the new headline filler, not just in Australia, but increasingly in the US. After a series of solid data prints in the US, markets have slashed bets on the Fed easing this year. There is increased debate that the Fed could hike rates this year, suggested by investment bank UBS, among others, after US retail sales data outperformed estimates. UBS indicated it sees a better than average chance that, should the data remain consistent with the recent trend, the next rate move would be higher. 

A Bloomberg article indicated that the Panama Canal will need at least until the end of this calendar year to fully recover from the 2023 drought which restricted vessel traffic. La Niña is expected to bring rainfall to the region in the coming weeks, but the deficits are extensive.