US wheat markets opened Tuesday about 5pc lower. The oilseeds complexes were lower but mixed. The Dow gained 2pc and Brent crude firmed a fraction.
- Chicago wheat July contract down US59 cents per bushel to 975.25c/bu;
- Kansas wheat July contract down 63.75c/bu to 1041.25c/bu;
- Minneapolis wheat July contract down 51.75c/bu to 1117.75c/bu;
- MATIF wheat September contract down €15.75/t to €372.50/t;
- Black Sea wheat July contract down $9.50/t to $401.75/t;
- Corn July contract down 23.75c/bu to 760.75c/bu;
- Soybeans July contract down 21c/bu to 1681c/bu;
- Winnipeg canola November 2022 contract down C$8.90/t to $953.90/t;
- MATIF rapeseed November 2022 contract down €18.75/t to €718.50/t;
- ASX July 2022 wheat contract down A$8/t to 450/t;
- ASX Jan 2023 wheat contract down $5/t to $464/t;
- AUD dollar firmer at US$0.696.
It is all about Russia, but now the focus is on the Russian export tax with rumours Russia may “tweak” the calculation to ensure the export path remains full. Consistent with this whole process is, the headline is one thing but the detail is another. There were reports of Russian inflation running at 20pc along with a strong Ruble at levels not seen since 2018.
No matter which way you cut it, the Russian crop is going to be a bin buster and, if Russia was not at war, the crop size would have weighed flat price significantly. It makes sense that the market remains sensitive to Russian availability. It is impossible to view this in isolation however. There was news overnight that Lithuania will ban the passage of goods across its territory into Kaliningrad, a Russian exclave on the Baltic coast. While this seems innocuous in the context of the war, the fact that Lithuania is part of NATO makes this bun fight significant. Nikolai Patrushev, secretary of the Security Council of the Russian Federation, said, “Russia will certainly respond to such hostile actions. Measures are being worked out in an interdepartmental format and will be taken in the near future. Their consequences will have a serious negative impact on the Lithuanian population,” according to Russia’s RIA Novosti state-owned news agency
After the close, The US weekly crop conditions report published after the market close showed declining crop ratings. Winter wheat good-to-excellent rating fell 1pc to a historical seasonal low of 30pc. Soybean crop conditions fell 2pc to 68pc rated good-to excellent and corn also dropped 2pc to 70pc rated good-to-excellent. The US winter wheat crop is now 25pc harvested versus 22pc average. The HRS wheat crop condition rating jumped 5pc up to 59pc good-to-excellent.
Looking forward, row crops in the US Midwest and Delta regions are both showing signs of moisture stress, a combination of higher temps and lack of rainfall. We are now within sight of the all-important pollination window.
Consumer demand, has taken the opportunity to go shopping. Saudi, Algeria, Japan and Bangladesh all either bought or are looking.
Locally, yesterday’s bid side of the market continued to retreat through the day as offshore futures relaxed on the open. The offers have stubbornly held their ground for now. Protein grades are faring much better through the whole east coast versus feed grades. Domestic consumers are stepping in intermittently to improve coverage heading into Q3&Q4.
The La Niña weather pattern has finally ended, according to a Bureau of Meteorology (BOM) update. The ENSO outlook status has moved to La Niña watch. However, some models suggest La Niña may re-form in the southern hemisphere during spring for the third consecutive time. A triple La Niña has only happened three times before – in 1954-57, 1973-76 and 1998-2001. Moving to La Niña watch did not change the outlook for above average rainfall for much of the country over the next few months.
A widespread 1-5mm has popped up on the forecast for Queensland and NSW next week. The timing of rainfall and totals received will impact the late winter crop plant.