International

US wheat exports were disappointing again, coming in at 158,900t versus the 305,000t needed to hit USDA. Higher prices are doing the job of squeezing demand. August export sales averaged just under 400,000t per week, while spot Chicago averaged around US$5.20/bu. So far in September, export sales are averaging under 300,000t with futures averaging $5.70/bu.

Russian winter-crop planting conditions are troubling. More than half of the Black Sea winter-wheat area remains too dry for planting or emergence, with little in the way of relief for the next 15 days. The southern region is now running over 100mm behind the cumulative average for this time of year.

Meanwhile in Brazil, excessive rainfall through RGDS is impacting its wheat crop, which is on the doorstep of harvest. Argentina is also facing some challenges; adding to a lack of moisture, heat is now impacting its wheat crop.

Australian grain production is hitting international wires as reports of the frost force many to reassess their balance-sheet assumptions. Damage is still be reconciled but crops in South Australia, Victoria and New South Wales have been unquestionably affected. From an international perspective, Australia has a “Chicken little” reputation – many early calls of reduced production have been subsequently erased by solid exports. Interestingly, the USDA seems to be formulaic when production estimates are north of 25 million tonnes, predicting 75-78 percent will be available to the export market. Given the impact to SA and Vic, and the supply chain challenges associated with having a bunch of production in northern NSW and southern Qld, this percentage will be pressured, and will potentially reduce tonnage available to major exporters.

Wheat demand was called into question when Turkiye put up the shutters on wheat purchases. This is set to expire in October, although many in the market expect this to be extended to the end of the year at least. India has been in the wires for well over a year, but has not amended its 40pc import tariff. In US$/t terms, India’s domestic wheat price has only been higher twice before, but India’s stocks of rice need to be included in this discussion.

China has been quiet, from an Australian cereal demand perspective at least.  China maintained its import tariff quotas for wheat, corn, rice, and cotton at previous levels for 2025; this is somewhat at odds with reports around a month ago that suggested these “TRQ” quotas could be trimmed – good news for the Australian wheat grower. October 2023 was the month that China came shopping last year; there’s  certainly no indication that is going to happen this year so far.

Australia

Frost is pretty much the only conversation in the east. Relative values of hay from a frosted crop are challenging to say the least. Rain through southern NSW may have helped keep some area heading for grain.

Domestic values are reflecting the concern, with the delivered Melbourne bid at A$370/t for delivery January onward.  Queensland and northern NSW are set for a bumper crop, with early sorghum adding to the feedgrain balance sheet.