International

Markets gave way last night in what has been a long week. Outside market noise is hard to ignore but impossible to predict. Exploding pagers, assassination attempts, rate cuts – this week had it all.  

Israel hit a heap of Lebanese targets overnight as Hassan Nasrallah announced the recent attacks amounted to a declaration of war. This thing escalates from here. He indicated that Israel would “face just retribution and bitter reckoning” and Israel would be met “with harsh punishment in ways they might expect and not expect” – Energy markets rallied US$2/bbl in response. It is hard to extrapolate the ag market impact of this developing dispute – Iran, Israel, Syria and Lebanon import just under 6 million tonnes (Mt) of wheat a year, while next-door neighbour Egypt is set to import 12Mt. 

US wheat export sales were disappointing at 246,300t, below the 435,000t five-week average and under the 320,000t needed to hit the USDA target. 

While there is a tenuous relationship between pre-dormancy conditions and final yield in the Northern Hemisphere winter crop, things are dry through the Black Sea region. While there is talk that this will adversely affect planted area, there is still time. Spring wheat conditions in Russia have been challenging but, for the next 10 days at least, things look benign; private estimates are sitting around 21Mt versus the USDA at 24Mt.

Indian wheat imports continue to be tabled. The initial solution, should India need a bucketload of wheat, was Russia. This has soured somewhat, given India’s support of Ukraine, and sending the odd missile or two its way. In USD terms, Indian domestic wheat values rallied to $345/t yesterday vs Russian CNF India, including the 40pc import tariff circa $359/t, $15/t away from working, which is bonkers. It supports the slight increase in Russian values overnight. 

Rain throughout the wheat areas of Argentina over the past few days are borderline helping their challenging season, but unfortunately are not falling in the catchment for the Paraná River, which is at its second-lowest level for this time of year since 1970. We need to watch this one as Argentina is our biggest competitor during the Dec-Mar position.

Australia

In the west we saw a slight uptick in daily prices for both wheat and barley. Canola was unchanged from the day prior. 

The opposite was seen in the east, with canola up by A$5-$10/t, and with wheat and barley holding steady from the trade of the day prior. 

It’s been a dry week for Western Australia and South Australia. Variable falls were seen in eastern cropping areas with most seeing 5-10mm, and falls up to 50mm in parts. Again, the Mallee in Victoria was bypassed by falls. 

The eight-day forecast is calling for widespread falls for the whole of Australia, with most areas set to see 15-25mm. 

Reports are coming in of higher-than-expected frost damage in NSW from last week’s cold snap, and some are now cutting crops for hay.