Markets

A rare up day for wheat in the US, while other global markets and indices weakened. With US wheat futures (Chicago and KS) near contract lows it makes sense that some risk was taken off the table. The reason behind the buying was a little rubbery. A Bloomberg article suggested China may lift some US wheat.  This time markets responded with buy the rumour sell the fact. On other occasions it is the other way round.  It doesn’t matter which way round because rumours about China are cause and effect in themselves. The soybean market is testament to this as sales pace into China has gone quiet, but waiting for US soybean business to China is either a game of patience, or chicken.

Black Sea region wheat traders are seemingly more confident with their production estimates as the headers start to roll. The majority of the market is centred between 77Mt and 80Mt which pegs exports around the 37Mt mark and allows the global consumer to pause and reflect. Other origins will be paying close attention to Russia FOB values as that will be the benchmark as we move into northern hemisphere new crop. Australian values have lined up reasonably well against the Russia competition but would quickly have to reprice if Russian FOB were to fall. Price inelasticity of demand for Australian wheat is a concept rather than a rule and Russian wheat has found its way to most Australian customers.

After the close the USDA pegged the US winter wheat harvest at 29pc complete, spring wheat was 7pc headed, corn was 2pc silked and beans were 5pc bloomed. Winter wheat good-to-excellent ratings lifted by 2pc to 52pc, spring wheat conditions fell to 75pc from 81pc, corn snuck up 1pc to 72pc and beans fell 2pc to be marked at 70pc. The stand out was the spring wheat conditions at 75pc and sorghum conditions which were pegged at 47pc good to excellent. The size of the fall in spring wheat will peak some interest although, when compared to the 5-year avg of 66pc there seems little to be concerned about. Sorghum however is certainly in trouble. Compared to the 5-yr avg of 63pc the condition of the crop will have most lowering production ideas and ultimately exportable surplus will suffer.

Australia

Aussie cash markets started the week softer again especially on new season wheat. Prices were off $2-3/t across the board and the January 21 ASX east coast contract was trading at $285/t for volume throughout the day. Old crop wheat and barley markets continue to trade hand to mouth on the east coast. New crop canola was firmer by $4-5/t yesterday across all port zones with Vic/NSW track prices edging back up to $600/t. Nearby barley vessels continue to pop up on lineups with nominated destinations. Interestingly China is still listed for 2-3 vessels and barley trans-shipments also continue at a steady pace with another boat nominated for Newcastle. The BOM 8-day forecast is indicating dryer conditions for NSW and Qld while some showers through WA 5-10mm will be well received.