For the regular readers – you will note I flagged the lack of fundamental trading thought the Christmas/New Year period. Please disregard that comment! Macros melted down as Goldman reduced their US GDP forecast sighting Omicron and the scale back of the Fed bond buy. Wheat shrugged that off and focused on the sand blasting that has taken place throughout the US HRW belt and the fact the Russian export quota is still not set. Throw in some speculation around HRW pricing into Iraq and fundamentals win.

Technically wheat looks to be forming a base. When the technicals line up its amazing how many fundamental reasons the market can find. Russia/Ukraine tension isn’t going away and the constant risk of a geopolitical blow up deserves risk premium. Grain demand has, generally been agnostic to COVID – demand hasn’t missed a beat. Energy however has been flapping in the winds of infection rates globally – and with Omicron shifting gears it’s under the pump.

China’s central bank cut its rates for the first time in 20 months as they try and stimulate their economy. • Nations across Europe are moving to reimpose tougher measures to stem a new wave of COVID-19 infections spurred by the highly transmissible omicron variant. The Dutch government imposed a tough nationwide lockdown starting Sunday in an attempt to rein in sharply rising levels of infections. Alarmed ministers in France, Germany, Austria and Cyprus have tightened travel restrictions. Ireland imposed an 8 p.m. curfew on pubs and bars and limited attendance at indoor and outdoor events. Paris cancelled its New Year’s Eve fireworks.

WA quality seeing 20pc more ASW than normal (and on a record size crop) at the expense of APW and higher grades. SA quality has seen a 20pc swing from Hard wheats to “other” which is largely going to be AGP and below grades. East coast quality is anecdotal, but Victoria seems to be ok for the most part, NSW estimated to have 7Mt or more of AGP and lower wheat, whilst Queensland quality for the most part is pretty good. The lower grades in SA and NSW are all about falling number problems, the test weight and protein have been okay in many cases but falling number is a big issue.

Australia

Cashboards kicked off the week with some firmness back in the market, although liquidity is thin

Wheat was up $3-5/t along the east coast. South Australian values up $5/t while WA wheat bids were relatively unchanged

Barley was a fraction stronger by $1-2/t and canola kept pulling back with selling activity drying up, we expect till the New Year now

Receivals in WA into CBH system continue to break records now taking in over 18.3Mt of all grains. Growers through Geraldton and Northern Kwinana zone are albeit finished or will be all tidied up by Christmas. Other zones are still going in what is a record WA crop now

Along the east coast GrainCorp network has taken in 10.4Mt now for the 21/22 season harvest

After some harvest delays over the weekend through Victoria due to rain, growers are now back in the paddock with a clear run set for WA, SA, Victoria and Southern NSW, while northern NSW and Queensland are set for another 25-30mm widespread rain event over the next eight days on the BOM

Summer crops are benefiting from rain now in what looks to be a healthy sorghum and cotton crop.