International markets eased overnight, mostly less than 1pc. Soybean meal was off 2pc and ASX wheat futures gained slightly.
- Chicago wheat July contract down US10 cents per bushel to 1045.5c/bu;
- Kansas wheat July contract down 5.25c/bu to 1092.75c/bu;
- Minneapolis wheat July down 12.25c/bu to 1155.5c/bu;
- MATIF wheat September contract down €0.25/t to €377.25/t;
- Black Sea wheat July contract up $2/t to $364/t;
- Corn July contract down 10.5/bu to 793c/bu;
- Soybeans July contract down 14.75c/bu to 1630.5c/bu;
- Winnipeg canola November 2022 contract down C$11.20/t to $1052.80/t;
- MATIF rapeseed November 2022 contract up €2.25/t to €804.50/t;
- ASX July 2022 wheat contract up A$2 to $417/t;
- ASX Jan 2023 wheat contract up $3/t to $428/t;
- AUD dollar firmer at US$0.710.
We have a weather market, stacked on a war market, stacked on an inflation market. The price Jenga tower looks challenging to say the least. Add in the fact that the US is miles above the world wheat market and you could end up with a hot mess. Rainfall through the Hard Red Winter wheat belt has been good no doubt, but the question remains how many points can you increase a 27pc good-to-excellent crop rating. The double-edged weather sword of good-for-HRW vs bad-for-HRS (and beans… and corn) planting will keep the weather trade here for a little longer. Exceptional ‘prevent plant’ payments vs high flat price has created a large range on Prevent Plant acres estimates. The planting window is still open for corn and beans but is getting tight for HRS.
Global veg oil balances are tight which has become a story since the war started given the impact on the sunoil supply. The one lever the world has to pull is bio-mandates which, if reduced in the major EU countries, would go a long way to solving the vegoil balance sheet. The recent sell off in Matif is linked to rumours that Germany may cut/reduce their mandates and while this isn’t confirmed the market took some chips off the table. The dynamic between rising energy costs and food inflation becomes a very difficult situation to manage. On one hand the EU is trying desperately to disentangle itself from Russian energy reliance while managing the inflationary impact of that decision. It is not easy.
The WASDE will be released on 12 May and USDA will be adding an amazing set of fundamentals into the blender. One of the key figures for me will be corn yield. Given the slow start to planting, is trend yield still on the cards? Russian wheat exports? US HRW production estimates?
Australia lifting interest rates was clearly the headline in every paper today. The AUD move was an interesting one because it pretty much shrugged off the move. Call it concern over China growth given the longevity of the zero-COVID policy or the fact that we are getting smoked on the rate race with the US. Either way the charts look pretty ordinary given the first increase in the last 11 years.
Domestic markets relaxed $5-$10/t yesterday on the back of softer offshore values. Selling liquidity is still scarce as growers focus their attention on sowing.
The RBA announcement to raise interest rates yesterday was followed by a sharp bounce in the AUD but relaxed towards the end of the session to finish at 0.710.
Our current estimate for the Australian 2022-23 wheat crop is around 29.5 million tonnes. Parts of SA could do with some more rainfall and parts of NSW need to dry out to get through planting programs but all in all it has been a very good autumn break. Above average sub-soil moisture for many areas, along with optimism about longer-term rainfall models is setting the season up for above average yields.
It is estimated that canola planting is well advanced throughout NSW with between 70pc and 95pc in the ground. Rainfall totals through central NSW have slowed things down but the moisture profile is there if they can get the crop in the ground. Wheat and barley planting is also progressing well with over 60pc planted in north/north west NSW.