Higher for grains, mixed for oilseeds.

Soybeans under pressure ahead of the July 6th tariff deadline, where the US Government is scheduled to enact their taxes on China. Informa didn’t help the cause in beans increasing their US production figures, coming in at 119.7 mmt vs. USDA at 116.5mmt. Soymeal was fractions higher up 10 cents per tonne, while soy oil was up 17 points. The bean market is looking for some certainty, so once the tariffs are imposed and out of the way, the market will have more confidence in trading.

Canola was fractions higher across both Canadian and EU futures. Ongoing production issues in Europe are putting pressure on EU import demand and could be supportive of Australian imports longer term.

Corn was close to unchanged, unable to follow strength in wheat with increased production estimates highlighting the ideal conditions and potential for further increases in US yields. Informa came out with their production estimates calling the corn yield 176, which equates to a 365.8 mmt crop vs. USDA at 356.6 mmt. South Korea purchased 2 cargoes of US corn. A hot dry ridge is forecast over the next 10 days through the corn belt, which may reverse “ideal” conditions there. The WASDE report next week is going to highlight tariff implication on trade, which will have a significant impact on corn. With the US government talking about internal price support mechanisms this should artificially inflate US prices which is supportive short term, but longer term bearish if US stocks build.

Wheat finished stronger with more global production concerns encouraging increased risk premiums. Implied vol in Sep SRW finished at 26.88%. Matif futures were up 3€ to 186.5€ as adverse weather prompts ongoing crop declines. The German crop is now potentially 2-4mmt lower and rumours were swirling that the UK will need to import wheat this year. Terms like “powder keg” are swirling around with regards to the global wheat balance sheet which is quite possible given how the production hits keep coming. Once we can get past politics then the market should refine its focus to fundamentals.

Saudi are tendering for another 1.5mmt of barley which will do a lot to soak up cheaper origin EU and Black Sea harvest supplies. The high price potential will likely come in the following two tenders where they may be forced to drag Aussie or Canadian grain away from China. With ongoing production declines in Europe and the Black Sea, the barley story is only gaining more potential.

Aussie prices were softer yesterday on old crop in Southern states, with grower tax selling being met by thin bid side liquidity from the trade. Northern markets remained strong with the 8-day forecast not presenting anything substantial. If it stays dry on the east coast, then the world market should start to refocus their attention on the Australian crop, given its potential for further declines.