The Day Ahead

Weather: Pretty quiet internationally. Some excessive rainfall in Brazil may impact their wheat production, and excessive heat in Russia and Ukraine may impact their corn crops.

Markets: Trading sideways and looking for the next catalyst. Currency will be the main driver.

Australia: Values should be slightly defensive with the higher AUD. Rainfall throughout southern NSW, Vic and SA will be watched closely, given mixed results so far.

International

Wheat markets have drifted into no mans’ land, waiting for the next input to drive direction. Post the Northern Hemisphere winter-crop harvest, production is largely known, and while there is still exposure to spring crops, traders have a decent read on what amount of inventory needs to be merchandised over the next year. Southern Hemisphere crops are a swing and a roundabout. Dryness and frost damage in Argentina has been largely offset by more confidence around Australian production. Interestingly, the Bureau of Meteorology’s three-month outlook was below average for the balance of the WA crop, which comes on the back of GIWA increasing production.

Demand holds the key, outside of a missile hitting an elevator or ship. Turkiye putting up the shutters has sent many back to their balance sheets, trying to see what they have missed. In Egypt, GASC is doing what GASC does, namely tendering for six months’ consumption, then telling everyone they have six months’ cover so they are fine. Meanwhile, Russian FOB values have found fair value for the moment.

Canada’s rail network looks like it will be effected by a lock-out of the teamsters’ union, representing around 10,000 workers.

The Australian dollar rallied over 0.6700 as wider US dollar weakness allowed the Aussie to move higher. Jackson Hole Economic Policy Symposium is on – and the market will be trading the sound bites that will flow. The comfort around the policy divergence between Australia and the US should keep the AUD bid, although, without any meaningful turn around in China economic data, rallies should find a natural cap. Iron ore remains under USD$100/t while Chinese steel rebar traded to its lowest level since 2017. China Baowa Steel Group warned conditions are worse than the downturns of 2008 and 2015.

Australia

Rainfall last week was less than Victorian growers had hoped for; large parts of the Western District received 10-15mm, with higher falls through the South Australian border regions. The Wimmera and Mallee regions only recorded 5-10mm to combat wind and temperatures in the mid 20s last week.

This coming week looks like it will bring some much-needed rain to southern cropping regions. In SA, the Eyre and Yorke peninsulas, Mid North and Murray regions have 10-25mm forecast. SA’s South East is likely to receive 25mm in upper regions and 50mm in lower parts. This rainfall will extend across the border into Vic, where 25-50mm is forecast to fall across the state’s cropping regions.

Current-crop barley was the focus of the market yesterday, with AUD$320/t free in store Kwinana trading in Western Australia, and SA values closer to $300/t port. Meanwhile, there were some H2 wheat trades in Vic that worked back to a $356/t port equivalent.