International

Nothing cures high prices like high prices. Like a toddler, markets listen to what they want to listen to. The increases in Russian production and comfort this tonnage finds its way to the export market, unencumbered, have pressured flat price. However, Russian rainfall isn’t the only fundamental at play. The winter wheat tour has been less than complimentary with the running yield estimates 10bpa lower than the USDA. Add to this the prevent plant dates looming in HRS and an export sales figure you could fit in the back of a few F250’s, and it’s hard to become a true believer in the break. However, this is a flow dominated market.

Russia responded to the push from the UN to open some of the Ukrainian ports to allow exports to flow. Predictably the Russians said (paraphrasing) “sure, no worries… just as long as all the sanctions against Russia are lifted, we will flick the ports back on”. The UN amazingly buys 50pc of its grain food aid program from the Ukraine. It’s an interesting one. Clearly, the US export program is lagging for old crop significantly. There has been rumblings from the Biden administration that they are going to get more active in the donation of grains from the US. This could right the ship on the export front, despite the headline flashes coming in well under the need pace to hit the USDA export estimate.

In a market built on war risk, there is the perpetual likelihood that a solution is found. At the moment, with global food inflation on the front of every newspaper and pressure via the UN to open the Ukrainian export path, there is a risk to the long that the world reduces a sanction or two to get access. Seems unlikely but this isn’t something you can model.

Indo has lifted their palm oil export ban. Local cooking oil prices eased around 10pc over the period of the ban.

Australia

Wheat and barley prices surged this week, ending up anywhere between $15-$55/t for the week. APW1 track Geel/Melb was up $35 to $510 while barley delivered Geel/Melb was up $40 for the week to $485/t. H2 wheat hit $570 delivered Brisbane. Canola prices were down $15-$25/t east coast yesterday with new crop down $50/t.

The latest three-month outlook issued yesterday by the BOM is still predicting above-average rainfall for both June to August and also July to September. June to August rainfall is very likely to be above median for much of mainland Australia, but below median for south-west Western Australia. The chance of exceeding median rainfall from July to September is similar although the chance of above average in WA increases from below 40pc to around a 50pc. Minimum temperatures for June to August are very likely to be warmer than median across almost all of Australia. The BOM indicating that the continuing La Niña, the chance of a negative Indian Ocean Dipole, warmer than average waters around northern Australia, and other localised drivers are likely to be influencing this outlook

Weekly rainfall totals for parts of northern NSW and southern QLD have done nothing to help cotton picking, late sorghum harvest or winter crop sowing.