International

In other markets, Black Sea wheat was up US$1/t, soybean oil firmed 2pc and soybean meal rose 4pc. The Dow Jones Industrials Average firmed 1pc.

The Russian conflict has taken a back seat to the unfolding issues with the South American growing season. First, the concerns centred on Argentina which, after an extended dry period, was roasted with a few days over 40 degrees Celsius. The next USDA global estimates will be released on February 9 and the market is clearly focused on how far the private analysts have moved their estimates. Supporting the view that the production concerns are real has been the recent appetite in US beans. The USDA flashed another sale of 132,000t to China, significant given they have just kicked off their Lunar New Year celebrations, historically a very quiet time on the purchasing front. Yesterday’s wires were full of concerns surrounding just how overbought beans are from an RSI perspective. The fact March beans posted new contract highs shows the desire of the speculators and commercial buyers to find a fundamental investment story in agriculture.

While early in the season, the pattern remains dry for southern and western Europe: UK, France, Spain, Italy and Hungary. Most of their growing areas would normally only be looking for 25 millimetres of rain in the next 15 days, but with much of the southern growing belt not really receiving any moisture since the start of the year, deficits will build. The US will receive some more snow cover which should help protect against winterkill. Some damage is expected in northern Kansas into Nebraska.

Australia

Markets continued to be a mixed bag across the local boards, wheat bids were a touch softer through the depot sites. Delivered prices into export and domestic pathways remained relatively unchanged.  Barley values were also largely unchanged through the track markets and canola continued to find a bid through the east coast and into South Australia.

The trade still seemed very focussed on the end-of-month process and execution programs as liquidity starts the week off moderately. The sorghum harvest has well and truly kicked off through the north, and more rain forecast is likely to present challenges.

Sites are filling quickly with reports of fantastic yields but quality is a concern.  Vessel line-ups for February continue to pick up the pace, with barley added a whopping 200,000t to take it to 820,000t nationally. Canola is sitting around 660,000t now for the month and wheat continues to tick along, but we did lose 100,000t for January that looks to be now pushed into February.