International

Markets rally on lack of rain and fall on rain. A combination of better forecast in the HRW and proof of rain in Australia added to the sell side last night. The move does ignore the fact that Russian rainfall remains low and heat is starting to build. Balance sheets still are digesting what an 80-83Mt Russian crop looks like and, with the street moving to the bottom of this range it’s hard to see that the market has done enough. However, the pull back in futures is a reminder that, almost regardless of crop size, the northern hemisphere is about to kick off harvest. 

A round of wheat buying has been evident, seemingly forced by the shrinking Russian outlook, from South Africa on protein through to the Persian Gulf looking for lower quality. The steady supply of Russian grain has allowed the global consumer to be relatively hand to mouth, once again, placing heightened concerns about the Black Sea crop. 

There is more talk about India scrapping its wheat import duty, although the market has been talking about this for months. While its wheat stocks are near record low, rice inventories have been pretty good. 

The corn market is almost forgotten. Most expect crop conditions to improve in the US this week and the forecast looks close to perfect. The wheat/corn spread has done a bunch of work and, ignoring the few months at the start of the Russian/Ukraine conflict, is trading at decile 10. Much like the “it’s going to be a wet east coast Australian harvest” calls that are already circulating, there is a decent number of the weather community that have already put a flag up for late US summer with some extreme temps expected.

Australia