Higher for European wheat and mixed for Canola with US markets closed for the July 4th holiday.

Canola futures finished higher in Europe as production concerns in French and Germany encourage more aggressive buying. The jury is out on the Ukrainian crop, with one part of the market thinking the current production is overstated and will not have the same dampening effect on European prices this year, as it did last year. Winnipeg futures were softer in apathetic, low volume trade. The absence of US oilseed markets did not encourage any aggressive local trading. Oilseed markets will be most affected by the US governments-imposed tariffs if they come to fruition on the 6th of July. The market is anxiously waiting an outcome there.

Wheat strength continues to build in Europe with fundamental traders recognizing the bullish potential in the global wheat balance sheet. Issues in France were flagged by Strategie grains earlier in the week, but with weather concerns in Germany and potentially the Baltic regions, we have a whole new set of issues in addition to those in Australia and the Black Sea. What the USDA do with this will all be revealed in next week’s WASDE report, but one scenario would be to increase US exports, which should set the futures market on a new path, so there is plenty of fun ahead for wheat.

The issues mentioned above for wheat, will also be affecting barley crops in the Europe and Black Sea regions. We have spoken about the tight global balance sheets a lot over the last two years, to the point that its getting tedious. BUT, these potential issues add a whole new set of bullish factors to the barley balance sheet, which could create record prices. Last year the world was at the tightest stocks:use since 1984, but with production potentially lower this year we could see record prices achieved depending on demand. This is a whole new conversation surrounding China feed grains, but the outcome of China and the US going to war on trade, suggests better demand potential for barley given the trade friendly countries that supply it to China. We are expecting to see a Saudi tender soon, which shouldn’t surprise from a flat price point of view given the harvest liquidity in the Ukraine. However, grower selling in barley needs to be viewed as a buying opportunity again this year, as the balance sheet cannot sustain demand for the remainder of the season, until prices reach a point that turns off demand. Barley is not yet performing that function on a relative value to other grains.

Aussie markets were very quiet yesterday with no one knowing how to price grain with CBOT closed….. Cash values were unchanged in very thin liquidity. The weather forecast is dry across the country for the next 8 days, was supportive for Northern markets yesterday which returned some of the previous days weakness. If the east coast forecast eventuates then we should expect to see further strength in pricing as yield potential should decline further.